The Vermont bonus tax calculator at the top of this page uses the supplemental tax rate so employers can easily figure out the net pay (or take-home pay) your employee should take home for wage payments such as bonus pay.
Behind the numbers
Behind the numbers
Updated: July 2, 2025
Does Vermont tax bonuses?
Yes. Vermont includes bonuses as part of taxable wages and applies the state’s progressive income tax rates. If supplemental wages—such as bonuses, commissions, or overtime—are paid at the same time as regular wages, employers should calculate withholding as if the total were a single wage payment for that period.
How to calculate bonus tax in Vermont
Bonuses are generally added to regular wages and taxed using Vermont’s standard withholding tables.
That said, if you apply the federal flat rate (22%) to a separately paid bonus, Vermont allows a corresponding state flat rate:
- 6.6% on supplemental payments up to $1 million
- 11.1% on supplemental payments over $1 million
This flat percentage is equal to 30% of the federal rate, as outlined by Vermont’s Department of Taxes and effective since January 1, 2019.
How much tax is taken out of a bonus in Vermont?
Up to 8.75% state + 22% federal = 30.75%
How do bonuses work in Vermont?
Bonuses must be included in total income, withheld accordingly, and reported on Form W-2.
What is the bonus tax rate in Vermont?
Vermont’s income tax rates range from 3.35% to 8.75%, based on income. If the federal flat rate is used for a bonus, Vermont allows a flat rate of 6.6% (or 11.1% on bonuses over $1 million).
How can employers in Vermont pay bonuses to employees?
Bonuses can be paid via:
- Check
- Direct deposit
- Pay card
Why are bonuses taxed differently than standard pay?
They aren’t — Vermont uses the same approach for all income.
How much tax is taken out of a bonus in Vermont?
Up to 8.75% state + 22% federal = 30.75%