Skip to main content

Income Tax Withholding

Federal Income Tax Withholding

The IRS encourages everyone to use the IRS Tax Withholding Estimator to perform a quick “paycheck checkup” for federal income tax. This is even more important following the recent changes to the tax law for 2018 and beyond.

IRS Tax Withholding Estimator

The Tax Withholding Estimator helps you identify your tax withholding to make sure you have the right amount of tax withheld from your paycheck at work.

Employees who complete a federal Form W-4, Employee's Withholding Allowance Certificate, are also required to complete a Vermont Form W-4VT, Employee’s Withholding Allowance Certificate.

Vermont Income Tax Withholding

Payments subject to Vermont tax withholding include wages, pensions, and annuities. Other payments are generally subject to Vermont income tax withholding if the payments are subject to federal tax withholding and the payments are made to:

  1. a Vermont resident or
  2. a nonresident of Vermont for services performed in Vermont.

The number of allowances used to calculate your Vermont Withholding will likely differ from your result using the IRS Tax Withholding Estimator. To update your Vermont Tax Withholding, you should submit a Form W-4VT to your employer.

File a New Vermont W-4VT

Form W-4VT is designed so that you can have as much “take-home pay” as possible without an income tax liability due to Vermont when you file your tax return. Each withholding allowance you claim on Line 5 above will reduce the amount of income you are taxed on and therefore the amount of Vermont income tax withheld each paycheck.

Here are some things to remember as you complete your W-4VT:

  • Generally, dependents are children under 19 (or up to 24 if they are a full-time student) and any relatives who live with you and who you support financially.
  • If you and your spouse both claim your dependents on your respective W-4VTs, not enough income tax will be withheld, and you might end up with taxes due when you file. Only one spouse should claim the dependents.
  • If you entered an additional amount to be withheld on the federal W-4, consider entering 30% of that amount on Line 6.
  • If you have more than one employer, consider claiming zero allowances with the employer(s) where you earn less income.​

Here are some frequently asked questions about Vermont employee's withholding allowance certificates.

For Employers

An employer is required to withhold Vermont income tax. To help employers determine which payments are subject to Vermont income tax withholding and how much to withhold from an employee’s paycheck the Department publishes a guide with withholding instructions, tables, and charts. Review the withholding tables to determine the correct amount to withhold from your employee’s paycheck.