Does Vermont tax pensions and retirement income?
Taxed, with narrow exceptions
Yes, generally. Vermont's retirement breaks are specific: up to $10,000 of federal Civil Service Retirement System income for filers under its income limits, similar exclusions for certain other systems, and an exemption for military retirement income.
In the state's own words
Copied word for word from the official document linked below each quote:
“Exemption for Civil Service Retirement System (CSRS) Vermont allows taxpayers who are below certain income thresholds to exclude the first $10,000 of retirement income from the federal Civil Service Retirement System.”
And Social Security?
Partly. Vermont exempts Social Security in full at lower incomes and phases the exemption out as income rises. For single filers in 2025, it is full up to $55,000 of adjusted gross income and gone at $65,000. The Vermont Social Security page quotes the rule.
Federal tax still applies
Whatever Vermont does, pensions, annuities and traditional IRA or 401(k) withdrawals are generally taxable on your federal return. See the federal tax brackets and, if you are 73 or older, the required minimum distribution calculator.
State rules change, and the details (age limits, income limits, which plans qualify) matter. Check with the Vermont Department of Taxes before you file or move.
Other states in the same group
Check our work
The answer above comes from this document. Follow the link and compare.
- Seniors and RetireesVermont Department of Taxes. Read on November 12, 2026.