Key Takeaways
- Vermont taxes LLC pass-through income at Graduated: 3.35% to 8.75% across five brackets
- Business Entity Tax (BET): $250 minimum annually, regardless of income, due Same date as the federal return — typically March 15 for calendar-year partnerships/S-corps
- Sales Tax: 6% state rate (combined: Up to 7% in roughly 30 municipalities (Burlington, Montpelier, Stowe, and others) that layer a 1% local option tax)
- Annual Report due Within 3 months after fiscal year end (January 1–March 31 for calendar-year LLCs), $45 for domestic LLCs fee
- Federal self-employment tax of 15.3% applies to net LLC profit regardless of state
- Vermont recognizes the federal S-Corp election with no separate state approval, but the $250 Business Entity Tax applies identically regardless of that election — electing S-Corp status doesn't reduce or avoid the BET.
- Same-day formation and compliance filing available through LLC Attorney at no markup on state fees
Vermont is one of the few states with a genuine minimum entity-level tax: the $250 Business Entity Tax, owed by nearly every LLC taxed as a partnership or S-corp regardless of profitability. Combine that with a graduated income tax reaching 8.75%, and Vermont's tax picture is more involved than its small size might suggest.
This guide covers exactly what a Vermont LLC owes in 2026: the mandatory $250 Business Entity Tax and its separate filing from the $45 annual report, state and federal income tax obligations, sales tax rules, and when an S-Corp election is worth the added complexity.
Vermont Personal Income Tax on LLC Profit
By default, a Vermont LLC is a pass-through entity — the LLC itself doesn't pay federal income tax. Profit flows through to the owners' personal returns, taxed once federally and once at Vermont's graduated rates up to 8.75%. But Vermont also taxes many LLCs directly at the entity level — see the Business Entity Tax below.
Vermont's rate: Graduated: 3.35% to 8.75% across five brackets
For single filers in 2026: 3.35% up to $45,400; 6.60% up to $110,050; 7.60% up to $229,550; 8.75% above (married-filing-jointly brackets are wider). Vermont uses its own standard deduction ($7,000 single) rather than federal figures.
No rate cuts are scheduled for 2026 — the 3.35%–8.75% range holds steady, but Vermont's use of state-specific standard deduction figures (rather than mirroring federal amounts) is a detail that trips up owners used to conforming states.
Vermont's Business Entity Tax (BET)
Nearly every Vermont LLC taxed as a partnership or S-corp owes the $250 Business Entity Tax annually, regardless of profitability — this is a true minimum tax, not a franchise tax tied to net worth or revenue. It's easy to confuse with, or forget alongside, the separate $45 annual report filed with the Secretary of State: two different obligations to two different agencies, both mandatory even for zero-income entities.
This is a genuine minimum tax, not an elective one — LLCs taxed as partnerships or S-corps owe the $250 BET even at $0 revenue. It's filed with the Department of Taxes via myVTax and is entirely separate from the $45 annual report filed with the Secretary of State (different agency, different due date). Vermont recognizes the federal S-Corp election, but the BET applies identically regardless of that election.
Vermont Sales Tax
Most sales of tangible personal property and specifically taxable services require registration and collection. Vermont's local option tax is unusually seamless to administer — it's collected and remitted alongside your state return with no separate local registration, so businesses in one of the roughly 30 participating municipalities simply charge 7% instead of 6%.
- State rate: 6% state rate, combined: Up to 7% in roughly 30 municipalities (Burlington, Montpelier, Stowe, and others) that layer a 1% local option tax
- Registration: Form BR-400 (Vermont Business Registration), No fee fee with the Vermont Department of Taxes (myVTax)
- The Department of Taxes assigns your filing frequency based on your estimated tax liability volume.
Vermont Annual Report Requirement
Vermont requires every LLC to file Annual Report with the Vermont Secretary of State, due Within 3 months after fiscal year end (January 1–March 31 for calendar-year LLCs). Filing fee: $45 for domestic LLCs.
Missing the annual report risks loss of good standing and eventual administrative termination by the Secretary of State — a separate consequence from any Business Entity Tax delinquency with the Department of Taxes.
Reinstatement requires filing the delinquent report plus a reinstatement fee through the Secretary of State's office.
Federal Self-Employment Tax and How Your Vermont LLC Is Classified
Regardless of which state you're in, LLC owners who materially participate in the business owe federal self-employment tax — 15.3% on net profit, covering Social Security (up to the $184,500 (2026) wage base) and Medicare (no cap).
Single-Member LLCs
A single-member Vermont LLC defaults to a disregarded entity — you report income on Schedule C and compute self-employment tax on Schedule SE. Vermont's graduated income tax applies on top at the personal level.
Multi-Member LLCs
A multi-member Vermont LLC defaults to partnership taxation, filing Form 1065 and issuing Schedule K-1s, with the Business Entity Tax filed on Form BI-471 (or BI-476 if all members are Vermont residents) — a filing-mechanics distinction rather than a rate difference.
Should Your Vermont LLC Elect S-Corp Taxation?
An S-Corp election lets you split LLC profit into a reasonable salary (payroll-taxed) and distributions (not subject to self-employment tax), once the business is consistently profitable enough to justify the added payroll complexity.
Vermont's treatment: Vermont recognizes the federal S-Corp election with no separate state approval, but the $250 Business Entity Tax applies identically regardless of that election — electing S-Corp status doesn't reduce or avoid the BET.
Vermont's top rate of 8.75% makes the S-Corp election's federal self-employment-tax savings meaningful, but remember the $250 BET is a fixed entity-level cost either way — it doesn't change the underlying salary-versus-distribution calculation, it's just an additional line item every Vermont pass-through entity owes.
Vermont LLC Tax Costs at a Glance
How to Handle Your Vermont LLC's Taxes
If You Do It Yourself
Step 1 — Get your federal EIN before anything else.
Apply for your EIN for free directly at irs.gov — a purely federal application with no Vermont-specific step.
Step 2 — Confirm your default federal tax classification.
A single-member LLC defaults to a disregarded entity (Schedule C); a multi-member LLC defaults to partnership taxation (Form 1065 plus Schedule K-1 for each member). Neither requires a separate election — this is automatic unless you file Form 8832 or Form 2553 to change it.
Step 3 — Register with the Vermont Department of Taxes if required for state income tax withholding or estimated payments.
No rate cuts are scheduled for 2026 — the 3.35%–8.75% range holds steady, but Vermont's use of state-specific standard deduction figures (rather than mirroring federal amounts) is a detail that trips up owners used to conforming states.
Step 4 — Register for sales tax if you sell taxable goods or services.
File Form BR-400 (Vermont Business Registration) with the Vermont Department of Taxes (myVTax) at myvtax.vermont.gov, No fee fee. The Department of Taxes assigns your filing frequency based on your estimated tax liability volume.
Step 5 — Register for payroll/reemployment tax the moment you hire your first employee.
The moment you hire your first employee, register with the Vermont Department of Labor. The new-employer rate is 1.0% (experienced employers range 0.40%–5.40%) on the 2026 taxable wage base of $15,400.
Step 6 — Set up quarterly estimated tax payments.
If you expect to owe $1,000 or more in combined federal and Vermont tax for the year, both the IRS and the Department of Taxes expect quarterly estimated payments covering income tax and federal self-employment tax on your LLC profit.
Step 7 — Calendar your Business Entity Tax (BET) due date.
Business Entity Tax (BET) (Form BI-471 (or the simplified BI-476 if all members are Vermont residents)) is due Same date as the federal return — typically March 15 for calendar-year partnerships/S-corps, $250 minimum annually, regardless of income. Missing it puts your LLC in bad standing with the Vermont Department of Taxes.
Step 8 — File your Annual Report every Vermont deadline.
Annual Report is due Within 3 months after fiscal year end (January 1–March 31 for calendar-year LLCs) with the Vermont Secretary of State, $45 for domestic LLCs fee.
Step 8 — Decide whether an S-Corp election makes sense once your LLC is consistently profitable.
Vermont's top rate of 8.75% makes the S-Corp election's federal self-employment-tax savings meaningful, but remember the $250 BET is a fixed entity-level cost either way — it doesn't change the underlying salary-versus-distribution calculation, it's just an additional line item every Vermont pass-through entity owes.
Step 9 — Watch for Vermont-specific tax traps.
Vermont splits recurring LLC compliance across two agencies with two different due dates: $45 to the Secretary of State for the annual report, and $250 to the Department of Taxes for the Business Entity Tax. It's genuinely common for owners to pay one and forget the other — both are mandatory every year even for a zero-income entity, and missing either has its own separate consequence.
Step 10 — Keep business and personal finances completely separate.
Commingling funds is the single biggest reason courts pierce the LLC liability shield, and it also makes tax preparation far more error-prone. Run all business income and expenses through a dedicated business bank account and keep receipts.
If LLC Attorney Does It for You
- Submit your information at llcattorney.com — entity classification, expected revenue, and whether you'll be hiring employees or collecting sales tax.
- LLC Attorney obtains your EIN, registers you with the Vermont Department of Taxes and Vermont Department of Taxes (myVTax) as needed, and sets up your compliance calendar for Annual Report and Business Entity Tax (BET).
- Receive reminders before every deadline through your client portal, plus access to flat-fee attorney consultations (no retainer) when an S-Corp election or multi-state question needs a licensed professional's judgment call.
When Should You Talk to a Tax Professional About Your Vermont LLC?
A CPA is worth consulting to make sure both the annual report and the Business Entity Tax get filed every year (they're easy to conflate since both are small, recurring, LLC-wide fees), to decide whether your profit level justifies an S-Corp election, and to confirm which BET form (BI-471 or the simplified BI-476) applies to your ownership structure.
What You Actually Get With LLC Attorney's Vermont Compliance Service
Vermont splits LLC compliance across two agencies with two different deadlines — miss either one and you're looking at penalties or loss of good standing. LLC Attorney's Vermont service tracks both the Business Entity Tax and the annual report so nothing falls between the cracks.
- EIN obtained for you at no extra charge.
- State tax and sales tax registration handled as part of formation, starting at $49.
- An ongoing compliance subscription (available through an ongoing compliance subscription — contact LLC Attorney for current pricing) tracks every Vermont deadline — Annual Report, Business Entity Tax (BET), and registered agent renewal.
- Access to professionally trained Business Success Advisors at no charge, plus flat-fee attorney consultations (no retainer) for S-Corp election analysis and multi-state nexus questions.
Vermont's two-agency compliance split trips up more owners than any tax rate does — LLC Attorney keeps your Business Entity Tax and annual report on separate, tracked schedules.
Get Your Vermont LLC's Taxes Set Up Correctly
Getting your EIN, tax registrations, and compliance calendar right from day one prevents expensive corrections later. LLC Attorney's Vermont formation service starts at $49, and an ongoing compliance subscription (available through an ongoing compliance subscription — contact LLC Attorney for current pricing) keeps you ahead of every deadline after that. See our full pricing for all service tiers.
Frequently Asked Questions
Yes — Vermont's Business Entity Tax (BET) is a genuine minimum tax of $250 annually, owed by LLCs taxed as partnerships or S-corps regardless of income, even at $0 revenue. It's filed on Form BI-471 (or BI-476 for all-resident entities) with the Department of Taxes, separate from the $45 annual report filed with the Secretary of State.
Only if you sell taxable tangible personal property or specifically taxable services. Register via Form BR-400 with the Department of Taxes (no fee), then collect Vermont's 6% state rate — plus 1% more if you're in one of the roughly 30 municipalities with the local option tax, for a combined 7%.
Every Vermont LLC files an Annual Report with the Secretary of State, due within 3 months after fiscal year end, for a $45 fee. This is separate from — and in addition to — the $250 Business Entity Tax filed with the Department of Taxes.
Missing the Vermont annual report risks loss of good standing and eventual administrative termination by the Secretary of State, requiring a reinstatement fee to fix. Separately, missing the $250 Business Entity Tax deadline with the Department of Taxes carries its own penalties and interest — the two obligations are tracked independently.
It depends on your profit level, and Vermont's top rate of 8.75% makes the federal self-employment-tax savings meaningful. Just remember the $250 Business Entity Tax applies at the entity level regardless of S-Corp election — it's not avoided by electing S-Corp status, only the individual income tax calculus changes.
A single-member Vermont LLC defaults to a disregarded entity for federal tax purposes — you report income on Schedule C and pay self-employment tax via Schedule SE. Vermont's graduated income tax (3.35%–8.75%) applies on top at the personal level.
If your LLC does business in a state other than the one it's formed in — an office, employees, inventory, or significant sales there — you may have created nexus requiring registration and tax obligations in that state too. This is fact-specific and worth a conversation with a tax professional if you operate in multiple states.
For a typical Vermont LLC with in-state owners and no employees: graduated state income tax up to 8.75% on your share of profit, the mandatory $250 Business Entity Tax, the separate $45 annual report, plus federal income tax and 15.3% federal self-employment tax (up to the $184,500 Social Security wage base for 2026). Add 6%–7% sales tax only if you sell taxable goods or services.
Yes. LLC Attorney's ongoing compliance subscription tracks your Vermont filing deadlines, handles your Annual Report, and connects you with flat-fee attorney consultations (no retainer) when a tax question needs a licensed professional's judgment call.