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2026 rules · verified against Vermont's primary source
Vermont partially exempts military retirement pay; conditions apply.
Military retirement and survivor benefit income is fully excluded if federal AGI is at or below $125,000; the exclusion phases out between $125,000 and $175,000 and is gone at $175,000+ (old $10,000 cap removed, retroactive to 2025).
Treatment
partially exempt
Top marginal rate
8.75%
Source: https://legislature.vermont.gov/statutes/section/32/151/05830e · verified July 2026
Estimated Vermont state income tax on your military retirement, using the top marginal rate on the taxable portion (an upper bound; your effective rate is usually lower).
More Vermont: all Vermont veteran benefits · military retirement tax in every state · what your pension is worth