The Vermont Department of Taxes will continue to publish additional FAQs on its business income tax form set as the tax season continues. Future FAQs will include discussion of other specific forms, including Schedule BI-477 and Schedule K-1VT. Please sign up for email communications to be notified when this page is updated.
This guidance is for Vermont Business Income Tax filers only. These are S-Corporations, Partnerships, and LLCs that file as “pass-through” entities for federal and Vermont income tax. C-Corporations (regardless of size) will always file Form CO-411, the Vermont Corporate Income Tax Return.
Terminology note: Throughout these FAQs, business owners are referred to as “shareholders, partners, or members” or “S/P/Ms”, consistent with how they are referenced in Vermont tax forms and instructions.
Section 1: Choosing and Filing the Correct Business Entity Income Tax Form(s)
Section 2: Bonus Depreciation Adjustment
Updated February 11, 2025
Section 1: Choosing and Filing the Correct Business Entity Income Tax Form(s)
Q1. May my business file the BI-476, Vermont’s short form for business income tax?
Many, if not most, Vermont businesses are eligible to file Vermont’s simplest business income tax form, Form BI-476.
A business can file Form BI-476 if:
- Its shareholders, partners, or members (S/P/Ms) are all Vermont residents,
- It operates only in Vermont, and
- It is only liable for the Business Entity Income Tax, also known as the $250 minimum tax.
Q2. If my Vermont business does not qualify for filing Form BI-476, what forms must it file?
If a business does not meet the criteria for Form BI-476, then it must file Form BI-471 and related schedules. Because the BI-471 is for larger and more complicated businesses, additional schedules are required.
If a business files Form BI-471 then it must also file:
- Either Schedule BI-472 or BI-473,
- Schedule BI-477, and
- Schedule(s) K-1VT – one for each S/P/M
Q3. What if my third-party software vendor does not support Form BI-476?
Form BI-476 is a simple one-page form. For the current tax year, you should file Form BI-476 using myVTax, Vermont’s free, online taxpayer services portal.
If you know your business’s EIN and tax year, filing this form should take about five minutes on myVTax. From the myVTax homepage (myvtax.vermont.gov), select “File a Return” on the “Returns” tile. When the Taxpayer information screen loads, select “Business Income” from the “Select which account type you wish to file for” dropdown to get started. If you need assistance, see Get Help with myVTax on the Vermont Department of Taxes website.
If your third-party software vendor does not support Form BI-476, the Department encourages you to contact the vendor and ask them to do so in future tax years.
Q4. My small business qualifies to file Form BI-476. Can it opt to file Form BI-471 instead?
Yes. However:
If a business opts to file BI-471, it must file the complete form set, including all required schedules. (See Q2)
If a business qualifies to file Form BI-476, it is strongly recommended that the business files that form. BI-476 is Vermont’s simplified business income tax return. It is a single page form and avoids the requirement to file additional unnecessary schedules. It can be filed for free on myVTax.
The Department understands, however, that not every third-party software vendor supports the filing of Form BI-476. (See Q3). If a taxpayer uses a third-party software vendor that does not offer Form BI-476, they may file Form BI-471 instead of Form BI-476.
Section 2: Bonus Depreciation Adjustment
Q1. What is the “adjustment due to disallowance of bonus depreciation” referenced in the instructions for Form BI-476?
Under 26 U.S.C. § 168(k), taxpayers are allowed a special allowance for certain depreciable property on their federal income tax returns – called “bonus depreciation.” Vermont law, however, does not allow this bonus depreciation. See 32 V.S.A. §§ 5811(18)(A), 5811(21) & 5811(28).
Businesses that utilize 26 U.S.C. § 168(k) on the federal level, therefore, must make an adjustment to account for the difference between the federal and the Vermont depreciation values. For more information on this adjustment, please see Page 7 of Form BI-471 Instructions.
Q2. If my business otherwise qualifies to file Form BI-476, but has a bonus depreciation adjustment, must it file Form BI-471?
No. For 2024, your business may file Form BI-476, the simplified return. This is a change from previous years, and it contradicts the instructions to Form BI-476. The Department is making this change because we do not want to disqualify businesses from filing the simplified form solely because they have utilized bonus depreciation. The Department will notify all vendors of this requirement change.
Note that any bonus depreciation adjustment incurred on the pass-through level and distributed to a resident S/P/M must be included in the total reported on Line 4 of that individual’s Schedule IN-112, as if they directly incurred the bonus depreciation adjustment themselves.