Vermont ranks low in terms of tax friendliness for retirees by Kiplingers. In fact, it ranks among the 10 worst.
But, once again, I don’t get it.
Yes, Social Security is taxed, but only to the extent its taxed at the Federal level. If you’ve been following my Youtube channel at all you’d know that Social Security is favorably taxed by the Feds.
So, while Vermont includes some Social Security in its tax calculation it’s not nearly as bad as Kiplingers would make you think.
In fact, I ran a calculation for a Vermont retired couple who had $50k in Social Security and $50k in IRA distributions. This couple paid all of $2k to the state in tax. That’s not too bad, actually.
On top of that Vermont has a moderately low sales tax, coming in at the 36th highest in the nation.
Finally, Vermont does have an extraordinarily high property tax coming in at the 5th highest in the nation from a percentage basis and the actual dollar amount homeowners pay.
For retirees with income less than $99k there is exemptions though.
However, property tax will be a retirees biggest expense, without question.
So, all in all, low sales tax, moderate income tax and high property tax puts Vermont in the middle of the US in terms of taxation, in my opinion.
See video here.