State and local taxes in Vermont are not only relatively heavy (in 2003, they amounted to 10.1% of income, and Vermont was ranked 12th highest in the country), but also variable (rates have been raised and lowered eight times since 1980) and highly centralized (over 78% of total state and local revenues are collected at the state level). In 2003, the Vermont's personal income tax also had the highest thresholds in the country: the five-bracket schedule ranged from 2.3% (on taxable income up to $27,950) to 9.5% (on taxable income above $307,050). Corporate income is taxed according to a four-bracket schedule ranging from 7% (on net income up to $10,000) to 9% (above $250,000), with a minimum corporate tax of $250. The state sales and use tax rate is 5%, with basics, including food and medicines, exempted, and local sales taxes limited to 1%. The state also imposes a full array of excise taxes covering motor fuels, tobacco products, insurance premiums, public utilities, alcoholic beverages, pari-mutuels, and other selected items. State property taxes are means-tested, and there is a broad property tax rebate program. There is no inheritance tax, but the Vermont legislature has taken action to preserve the state's estate tax independent of the scheduled phase-out of the federal tax exemption for state death taxes. Death and gift taxes accounted for 0.8% of state collections in 2002. Other state taxes include various license fees and stamp taxes.
The state collected $1.533 billion in taxes in 2002, of which 31.6% came from state property taxes, 24.4% from individual income taxes, 20.5% from selective sales taxes, 14% from the general sales tax, 4.5% from state license fees, and 2.4% from corporate income taxes.
The following table from the US Census Bureau provides a summary of taxes collected by the state in 2002.
($000) | PER CAPITA | |
Total Taxes | 1,533,982 | 2,487.84 |
Property taxes | 484,306 | 785.46 |
Sales and gross receipts | 529,638 | 858.98 |
General sales and gross receipts | 214,841 | 348.43 |
Selective sales taxes | 314,797 | 510.54 |
Alcoholic beverage | 15,578 | 25.26 |
Amusements | (X) | (X) |
Insurance Premiums | 36,181 | 58.68 |
Motor fuels | 86,440 | 140.19 |
Pari-mutuels | (X) | (X) |
($000) | PER CAPITA | |
Public utilities | 10,893 | 17.67 |
Tobacco products | 26,599 | 43.14 |
Other selective sales | 139,106 | 225.6 |
Licenses | 69,300 | 112.39 |
Alcoholic beverages | 436 | 0.71 |
Amusements | 144 | 0.23 |
Corporation | 1,680 | 2.72 |
Hunting and fishing | 6,393 | 10.37 |
Motor vehicle | 40,974 | 66.45 |
Motor vehicle operators | 2,711 | 4.4 |
Public utility | (X) | (X) |
Occupation and business, NEC | 15,524 | 25.18 |
Other | 1,438 | 2.33 |
Other taxes | 450,738 | 731.01 |
Individual income | 374,445 | 607.28 |
Corporation net income | 37,306 | 60.5 |
Death and gift | 13,886 | 22.52 |
Documentary and stock transfer | 21,691 | 35.18 |
Severance | (X) | (X) |
Other | 3,410 | 5.53 |