Vermont Estate Tax: Exemption and Rate Guide

Vermont exempts the first $5 million of an estate and taxes the excess at a flat 16 percent, then scales that bill down to the share of the estate that actually sits in Vermont.1

No tiers, no ladder, no inflation indexing to track. This guide covers who pays, how the flat rate and the Vermont share fit together, what a surviving spouse inherits tax free, when the return is due, and how Vermont's tax differs from the federal estate tax and from Medicaid estate recovery.

In This Guide

• Vermont Estate Tax at a Glance
• How the Vermont Estate Tax Works
• Estate Tax vs. Inheritance Tax
• The Federal Estate Tax Is Separate
• This Is Not Medicaid Estate Recovery
• Frequently Asked Questions
• Next Steps

Vermont Estate Tax at a Glance

Here is the whole picture in one place.

The rate structure is unusually clean: a flat $5 million exemption, and a single flat rate above it.1 The one wrinkle is geography, because only the Vermont share of the estate is taxed. Vermont has no separate inheritance tax, so heirs are not taxed on what they personally receive.

How the Vermont Estate Tax Works

The estate tax is paid by the estate, out of the deceased person's assets, before heirs are paid. Vermont's version is about as simple as a state estate tax gets.

The exemption. The first $5 million of a Vermont estate passes tax free.1 Unlike many states, Vermont's exemption is a fixed flat figure, not an inflation-indexed number that changes every year.

The flat rate. Value above the $5 million exemption is taxed at a flat 16 percent, before the Vermont-share apportionment below is applied.1 There are no graduated brackets. Only the value above the exemption is taxed: the first $5 million always passes tax free, and the flat 16 percent applies solely to the excess over that line. That excess is where the calculation starts, not where it ends.

Property outside Vermont. The rate table is not the whole calculation. Vermont works out the 16 percent, then multiplies it by a fraction that can never exceed one: the Vermont gross estate plus Vermont-situs gifts, over the federal gross estate plus those same gifts.1 For a Vermont resident, everything counts toward the Vermont side except real or tangible property located outside Vermont at death; for a nonresident decedent, intangible property is left out as well.1 So a Vermont resident who dies owning an $8 million estate that includes a $2 million Florida condominium is not taxed as though all of it sat in Vermont: the condominium is apportioned out of the Vermont share before the bill is set. Every value in the calculation is the one finally determined for federal estate tax purposes.

Transfers to a surviving spouse. Vermont figures its tax from the federal taxable estate, which allows an unlimited marital deduction, so property left outright to a surviving spouse passes free of Vermont estate tax no matter how large the estate.1 That can defer or eliminate tax when the first spouse dies. But Vermont offers no portability, so the survivor cannot inherit the deceased spouse's unused $5 million exemption. When the second spouse dies, the full estate is measured against a single $5 million line, which is exactly the gap trust planning is built to close for couples whose combined assets are over the exemption.

Filing. The Vermont Department of Taxes administers the estate tax on Form EST-191, which is due within nine months of the date of death.1 Form EST-195 buys a six-month extension to file, but an extension of time to file is not an extension of time to pay, so the tax itself is still due at nine months.1 In 2026 the Legislature raised the filing threshold to $5 million to match the payment threshold, effective June 18, 2026, so a single $5 million line now decides both whether an estate files and whether it owes.1 The Department of Taxes estate tax page carries the current forms, the thresholds, and the filing instructions.

Because the rate jumps straight to 16 percent with no lower brackets to ease into, an estate just over the $5 million line can owe a meaningful bill on the first dollar above it.1 If your estate is near or over $5 million, talk to an estate attorney. Trusts and lifetime gifting can keep an estate under the line or shrink the slice exposed to that flat 16 percent.

Estate Tax vs. Inheritance Tax

These two terms get used interchangeably, but they are different taxes paid by different people.

• An estate tax is paid by the estate. It comes off the top before heirs receive anything. Vermont has this one.
• An inheritance tax is paid by each heir on what they personally receive, often at a rate set by the relationship. Vermont does not have this one.1

So Vermont has exactly one state death tax, the estate tax, and the estate settles it. If you inherit from a Vermont estate, you do not owe Vermont a separate inheritance tax on your share.

The Federal Estate Tax Is Separate

Vermont's estate tax sits alongside a completely separate federal estate tax. The two are filed and calculated independently.

For 2026, the federal basic exclusion is $15,000,000 per person and the top federal rate is 40 percent, filed on IRS Form 706.2 Because that federal exemption is so high, the large majority of estates owe no federal estate tax even when they owe a state estate tax in a state with a much lower exemption.2

Vermont's $5 million exemption is well below the federal figure, so an estate between $5 million and $15,000,000 can owe Vermont estate tax while owing the IRS nothing.1,2 The lower state line is the one most Vermont families need to plan around.

This Is Not Medicaid Estate Recovery

Families often confuse the estate tax with Medicaid estate recovery. They are separate processes.

Estate recovery is how a state seeks repayment from the estate of someone who received long-term-care Medicaid, usually by claiming against the home after death. It has nothing to do with the estate's size or the estate tax exemption. A modest estate that owes zero Vermont estate tax can still face a recovery claim, and a large taxable estate that never used Medicaid faces none. Our explainer on Medicaid estate recovery covers how that works.

Next Steps

If your estate is comfortably under $5 million, Vermont's estate tax is not your concern. If you are near or over it, plan early, because the flat 16 percent starts on the first dollar over the line.1

• Add up the whole estate, including life insurance, retirement accounts, and real estate, and compare it to the $5 million exemption.1
• Remember the rate is flat, so there is no gentle lower bracket: value over the line is taxed at 16 percent immediately, then apportioned to the Vermont share of the estate.1
• Weigh the spousal picture, since transfers to a surviving spouse pass tax free but Vermont offers no portability, so a couple over the exemption should plan before the first death.
• See an estate attorney if you are near or over $5 million. Trusts and gifting can shrink the taxable slice.
• Mind the nine-month clock if you are settling an estate: Form EST-191 is due nine months after the death, and the six-month extension covers filing only, not payment.1

For the bigger financial picture, our guide to building a senior care funding plan ties taxes, benefits, and care costs together, and if a home is part of the estate, selling or renting a home for care covers that trade-off.

Learn More

Find personalized help understanding the Vermont estate tax and your family's plan at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.