Major Vermont Taxes

Estate and Gift Taxes

Gift Tax –
There is no Vermont gift tax.

Estate Tax –
REPORTING INCOME

If a deceased taxpayer received Vermont income and is required to file a Federal income tax return, a Vermont income tax return
(Form IN-111) must also be filed on the deceased taxpayer’s behalf.  The return, reflecting income received from January until the date of death, should be filed with the Vermont Department of Taxes, along with payment for any tax due.
 
To claim an income refund on the deceased taxpayer’s behalf, attach one of the following documents to Form IN-111: court certificate showing your appointment as administrator or executor (not needed if a surviving spouse); or Form 176; or Federal Form 1310.

For income received after the date of death, Federal Form 1041 and Vermont Form FI-161 (Fiduciary Tax Return) must be filed with the Vermont Department of Taxes.  There is a filing requirement whenever a decedent’s estate receives gross income of $600 or more during the tax year after the date of death.  It may be necessary to file more than one fiduciary return while the estate remains open and continues to receive income.

ESTATE TAX

Although Vermont does not have an inheritance tax, it has an estate tax.  Vermont Estate Tax Return (Form E-1) must be filed if the decedent’s estate is required to file a U.S. Estate Tax Return
(Federal Form 706).  Federal estate tax returns are required when an estate exceeds specified gross estate values:

Gross estate value generally includes the value at the time of death
of all assets in which the deceased retained an interest (for example, jointly owned assets, individually owned assets, insurance policies and trust assets).

If an estate meets the federal gross estate value, a Vermont Estate tax return must also be filed, but Vermont’s calculation differs from the federal. Instructions for completing the form, a Vermont tax rate chart, and a worksheet are provided with the Vermont Estate Return (Form E-1).

PROBATE ESTATE and TAX CLEARANCE

When a decedent owns assets in his or her individual name, an estate must be opened in a Vermont probate court.

Click here for information on Probate Courts

The probate court requires a tax clearance from the Vermont Department of Taxes to close the estate.  Vermont Form E-2A, Vermont Estate Tax Information and Application for Tax Clearance, should be completed for this purpose.

The Department will not issue a tax clearance until all required Vermont tax returns are filed, which may include one or more of the following:

• Income Tax Return for current and (if applicable) prior year

• Fiduciary Tax Return (except final return)

• Estate Tax Return

For More Information Call:
(802) 828-2548

E-Mail the Estate Tax Unit

Tax Types :
- Business Entity Income Tax
- Cigarette and Tobacco Taxes
- C Corporation Income Tax
- Estate and Gift Taxes
- Fiduciary Tax
- Franchise Tax
- Fuel Gross Receipts / Petroleum Distributor
- Individual Income Tax
- Land Gains and Real Estate Withholding
- Meals and Rooms Tax
- Motor Vehicle Tax
- Property Tax
- Property Transfer Tax
- Sales and Use Tax