New Vermont Payroll Tax Takes Effect Next Year

Effective July 1, 2024, Vermont employers will be required to make contributions for a new state payroll tax [H.B. 217, L. 2023]. A portion of the tax may be withheld from employee wages, and the rest must be paid by the employer. The bill became law after the state legislature voted to override the governor’s veto of the bill. The new tax was established to provide funding for child care.

Tax Rate

The contribution rate is set at 0.44% of an employee’s covered wages. The rate is set at 0.11% on self-employed workers’ income. Of the 0.44%, an employer may deduct and withhold not more than one quarter (0.11%) of the required contribution. The rest of the contribution must be paid by the employer. Employers will remit contributions to the Vermont Department of Taxes.

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Lia Coniglio, Esq., is Managing Editor of PayState Update and Senior Manager of State Payroll Information Resources for PayrollOrg.