Crypto Tax Rules in Vermont: Complete 2024 Guide
Vermont takes a progressive approach to income taxation, including cryptocurrency gains. As a New England state known for environmental consciousness and financial technology interest, Vermont taxes crypto as property income subject to state income tax. For a broader overview of federal obligations, see our complete guide to crypto taxes.
Quick Answer
Vermont taxes crypto capital gains at progressive state rates of 3.35% to 8.75% depending on income level. Capital gains are taxed as ordinary income without special preferential treatment. Vermont residents must file a state tax return, due April 15. The state follows federal property treatment for crypto.
Does Vermont Tax Cryptocurrency?
Vermont does tax cryptocurrency. The state applies a progressive income tax ranging from 3.35% to 8.75% based on income level. This means crypto investors in higher tax brackets pay a higher percentage of their gains to Vermont.
Vermont follows federal guidance treating cryptocurrency as property. Each transaction that generates a gain or loss is taxable. Mining, staking, trading, and receiving airdrops all create taxable events in Vermont.
The state has been progressive in digital asset discussions and recognizes the importance of blockchain technology. However, Vermont hasn't passed specific exemptions or preferential treatment for cryptocurrency. Crypto is simply treated as property income subject to standard income tax rates.
Capital Gains Treatment
Vermont taxes capital gains as ordinary income, meaning they're subject to the same progressive rates as wages and business income. There's no preferential capital gains rate in Vermont state law.
Vermont's progressive tax brackets are structured as follows: 3.35% on the lowest bracket, increasing to 8.75% on the highest earner. A crypto trader realizing large gains would owe a higher state percentage than someone with modest gains.
Suppose you realize $50,000 in crypto capital gains and fall into Vermont's higher tax bracket at 8.75%. You'd owe $4,375 in state tax on that gain, on top of federal taxes.
The long-term versus short-term distinction matters federally but not at the Vermont state level. Vermont imposes the same tax rate on both long-term and short-term crypto gains. However, federally, long-term gains (held over one year) receive preferential rates (see federal crypto tax rates), which provides some federal-level tax advantage.
How to Report Crypto in Vermont
Vermont requires residents to file a state tax return if they have income, including crypto gains. The state has its own form and reporting structure separate from federal forms.
Here's what you need to do:
File Form PIT-111 (Vermont Individual Income Tax Return) by April 15. For a walkthrough of the federal portion, see how to file crypto taxes. Include all crypto gains and losses on the return.
Report capital gains on the Vermont return. Calculate your net gain or loss from all sources, including crypto.
Track mining and staking income separately. These are ordinary income items and should be reported on the appropriate income line.
Maintain detailed records of all transactions. Keep dates, cost basis, selling prices, and fair market values for every crypto transaction.
Use FastCryptoTax to calculate your federal gains and losses, then adapt this information for your Vermont return. The tool provides the transaction detail you need for accurate state filing.
Vermont State-Specific Tips
Vermont has shown interest in blockchain technology and digital assets. The state doesn't have specific anti-crypto legislation, and the regulatory environment is generally neutral to supportive of fintech innovation.
Vermont's progressive tax system means that high-income crypto traders pay more than moderate earners. If you're a substantial crypto trader in Vermont, budgeting for state taxes is essential. The difference between Vermont's top rate (8.75%) and a no-tax state's rate is significant.
Vermont has a 6% sales tax on most purchases. This applies to general retail but typically not to digital assets bought and sold on exchanges.
If you're considering relocating to Vermont or if you're already a resident, understand that Vermont taxes worldwide income from residents. You can't reduce your Vermont tax burden by trading through non-Vermont entities.
Multi-state traders should pay careful attention to residency. A Vermont resident must file a Vermont return on all income, including crypto gains earned through exchanges or wallets that operate outside the state.