What the rule says
Vermont imposes a state estate tax under Vt. Stat. Ann. tit. 32, § 7442a et seq. Vermont's framework occupies a mid-range position among state estate taxes:
$5 million threshold
The Vermont estate tax exclusion is $5 million per individual (not indexed for inflation in most provisions).
Vermont's threshold is between: - Federal estate tax: ~$13.99M (2026) - Connecticut: $13.99M (federal-conformed) - New York: $7.16M - Maine: ~$6.8M (indexed) - Vermont: $5M - Illinois: $4M - Minnesota: $3M - Massachusetts: $2M - Rhode Island: ~$1.77M (indexed) - Oregon: $1M
No portability
Like most state estate taxes, Vermont does not recognize federal portability of unused exclusion between spouses. Each spouse's $5M exclusion is used at that spouse's death; it cannot be transferred.
Tax rates
Vermont applies a 16% rate above the threshold — same as MA, NY, MN, OR, RI.
What this means in practice
Vermont's $5M threshold + no portability framework produces:
- Most Vermont estates face no estate tax. With the threshold at $5M, most Vermont residents pass wealth to heirs free of state estate tax. - High-net-worth Vermont couples face Vermont-specific planning. Without portability, the first-deceased spouse's $5M exclusion is wasted unless captured through bypass trust planning. - Federal estate tax for largest estates. Estates above ~$13.99M face both Vermont and federal estate tax.
For an estate of $8 million: - No federal estate tax (below $13.99M) - Vermont estate tax on $3M of taxable estate at 16% — approximately $480,000
What you can do about it
For Vermont residents with substantial assets:
- Calculate Vermont estate tax exposure. $5M threshold and no portability rule drive planning. - Use bypass trust planning for married couples to capture both spouses' exclusions. - Consider QTIP elections strategically. - Use lifetime gifting. Vermont has no state-level gift tax. - Engage a Vermont estate tax advisor.
For non-Vermont residents considering relocation:
- NH (no state estate tax) is a common comparison destination given proximity. - Vermont real estate remains taxable even for non-resident decedents.
Who this affects most
Vermont's estate tax framework is most consequential for:
- High-net-worth Vermont residents whose estates approach $5M - Married Vermont couples whose combined assets exceed $5M - Estate planners coordinating Vermont-specific exposure with federal planning
Vermont's mid-range threshold makes the state estate tax less aggressive than MA/RI/IL/MN/OR but more relevant than CT or no-tax states (NH, FL, TX, etc.).