What is the Vermont estate tax exemption for 2025?

Vermont's estate tax exemption is $5,000,000 per estate in 2025. Estates valued at or below $5,000,000 owe no Vermont estate tax. Only the value above the exemption is taxed, and Vermont applies a single flat rate rather than a graduated schedule.

What is the Vermont estate tax rate?

Vermont charges a flat 16% on the value of the taxable estate above the $5,000,000 exemption. Unlike the federal system's graduated brackets, Vermont's rate does not step up as the estate grows — every dollar above the exemption is taxed at 16%.

Does Vermont have an inheritance tax or a gift tax?

Vermont has an estate tax, not an inheritance tax, so the tax is paid by the estate rather than by individual heirs. Vermont has no separate gift tax, but taxable gifts made within two years of death are added back to the gross estate for the Vermont calculation, which this tool accounts for.

How does Vermont estate tax compare to federal?

The two are entirely separate. The federal estate tax has a far larger exemption — $13,990,000 per individual in 2025 — and a top rate of 40%. Many estates that owe nothing federally still owe Vermont estate tax because Vermont's $5,000,000 exemption is much lower. A large estate can owe both.

Can deductions reduce the Vermont estate tax?

Yes. The unlimited marital deduction (assets passing to a surviving spouse) and the charitable deduction can dramatically reduce or eliminate the taxable estate, and valuation discounts may apply to certain assets. This calculator gives a baseline estimate before such deductions, so consult an estate attorney for precise planning.

Vermont Estate Tax Calculator

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Vermont is one of a minority of US states that imposes its own estate tax, and its exemption is far lower than the federal one — meaning estates that owe nothing to the IRS can still face a Vermont bill. This calculator estimates Vermont’s flat 16% tax on the value above the $5,000,000 state exemption, optionally layering in a federal estimate so you see the combined picture.

How it works

Vermont’s calculation is straightforward by design:

Gross estate — the total value of all assets at death, plus any taxable gifts made within two years of death, which Vermont adds back.
Exemption — the first $5,000,000 passes free of Vermont estate tax.
Tax — a flat 16% applies to every dollar above the exemption.

So Vermont estate tax = (gross estate − $5,000,000) × 16%, never less than zero. The optional federal layer applies the 40% top rate above the $13,990,000 federal exemption for a combined view.

Example and notes

A $7,000,000 estate exceeds Vermont’s exemption by $2,000,000, producing a Vermont estate tax of $320,000 (16% × $2,000,000). The same estate owes no federal tax because it sits below the $13.99M federal exemption — a vivid illustration of why Vermont residents need state-specific planning.

This is a baseline estimate. The unlimited marital deduction, charitable deduction, portability between spouses, and valuation discounts can change the result substantially. Treat the output as a planning starting point, consult an estate attorney, and verify current figures at tax.vermont.gov.