The governor's tax commissioner used the state's website and five newspapers in the last week of the campaign to argue that Vermont's rich already pay their share and that the federal tax cut they got was not a cut. His own Department's tables, and the one published ranking that would support the phrase, say otherwise.
A week before Vermonters vote, the governor's tax commissioner published a commentary in five newspapers and on the Department of Taxes website.1 It opens "With election season here" and names no candidate. It does not need to. Its target is the plan at the center of the challenger's campaign: a surcharge on incomes over $250,000 and $500,000. She pitches it as asking the wealthy to give back the same amount they gained from the new federal tax cut.2 The governor who appointed the commissioner opposes it, and is running on tax cuts of his own.3
Six days earlier, at the Vermont Public debate, the governor was asked about the challenger's surcharge. His answer: "we have the most progressive tax system in the country."4 The commentary makes two claims. The federal cut, it says, was not really a cut. And Vermont already has "one of the most progressive state tax systems in the country," and any new money would have to come from a new tax on Vermonters. The second claim rests on a cherry-picked measure. The first is a straw man. Both come from the office that publishes the numbers that would have told the whole story.
The commissioner's evidence that the system is progressive is who pays the income tax: the top earners pay a third of it, the top tenth about two-thirds, the bottom half under 3 percent.5 The figures are accurate. They answer the wrong question. A revenue share says how much of one tax comes from a group. It says nothing about what share of its own income the group hands over. That is the measure every study of tax fairness uses. The Department's own tables use it too, and on those tables the top 1 percent of filers paid about 7 cents of every dollar of income in state income tax in 2024.6 That is a progressive income tax: the share rises with income. Nobody disputes it.
The income tax is one tax. Vermonters also pay the education property tax, the municipal property tax, the sales tax and the excises. The one published ranking of state tax systems that would support the commissioner's phrase comes from the Institute on Taxation and Economic Policy. It counts all of those taxes, and it does put Vermont third from the top. It is a list of mostly regressive states. Its authors describe Vermont's system as one that "tilts slightly progressive" and is "regressive through the top part." Regressive means the share falls as income rises. They note that the top 5 percent pay slightly lower rates than upper-middle-income families.7 On ITEP's figures, the share of income paid rises from the middle to the upper-middle class and then falls. The top 1 percent pays within a tenth of a point of the middle 20 percent.
Vermont's own Tax Structure Commission said the same in 2021: "slightly progressive," and, quoting an ITEP analyst, not "consistently or robustly" so. The same report called Vermont's income tax one of the most progressive in the country. The system as a whole is a different thing.8 The Legislature's fiscal office briefed the House on ITEP's ranking in January 2024. It told the committee that none of the ten states it compared, Vermont among them, is robustly progressive in any traditional sense.9 Two months later the commissioner of the day wrote to the same committee on the same subject.
The Gazette ran four households through this year's bills in Middlesex and Montpelier: the median Vermont household; a household at the 75th percentile, richer than three in four; a household at the bottom edge of the top 1 percent; and the average top-1 percent filer. The income tax is counted at what each group actually paid in 2024, after every credit and exclusion, not at the rates in the schedule. The property taxes are this year's bills at this year's rates. The sales and excise taxes follow what households at each income actually spend; for the top two rows, they follow what the survey's highest income class spends.10
Middlesex, 2026-27 bills, share of household income
| Household | Income ($) | Home, market value ($) | Income tax (%) | Education (%) | Municipal (%) | Sales and excise (%) | Total (%) |
|---|---|---|---|---|---|---|---|
| The median Vermont household | 82,730 | 304,000 | 2.70 | 2.94 | 1.71 | 1.68 | 9.03 |
| A household at the 75th percentile | 138,800 | 435,000 | 3.30 | 3.84 | 1.46 | 1.51 | 10.11 |
| A household at the top-1% threshold | 586,634 | 800,000 | 6.50 | 1.67 | 0.63 | 0.57 | 9.37 |
| The average top-1% filer | 1,563,682 | 800,000 | 6.71 | 0.63 | 0.24 | 0.21 | 7.79 |
Montpelier, 2026-27 bills, share of household income
| Household | Income ($) | Home, market value ($) | Income tax (%) | Education (%) | Municipal (%) | Sales and excise (%) | Local option tax (%) | Total (%) |
|---|---|---|---|---|---|---|---|---|
| The median Vermont household | 82,730 | 304,000 | 2.70 | 2.13 | 3.32 | 1.68 | 0.15 | 9.98 |
| A household at the 75th percentile | 138,800 | 435,000 | 3.30 | 3.34 | 2.84 | 1.51 | 0.14 | 11.12 |
| A household at the top-1% threshold | 586,634 | 800,000 | 6.50 | 1.45 | 1.23 | 0.57 | 0.05 | 9.81 |
| The average top-1% filer | 1,563,682 | 800,000 | 6.71 | 0.54 | 0.46 | 0.21 | 0.02 | 7.95 |
Columns are rounded separately; totals are computed from dollars.
The household at the top-1 percent threshold has about $450,000 more income than the one at the 75th percentile and pays a smaller share of it. The average top-1 percent filer pays a smaller share than the median household, in both towns. The threshold household pays more than the median in Middlesex, 9.37 against 9.03, and less in Montpelier, 9.81 against 9.98. Only the income tax rises with income. Everything else, the two property taxes and the taxes on spending, takes a shrinking share the richer the household. From the 75th percentile up, the fall in those outweighs the rise in the income tax.11 The home matters: give the threshold household a $1.2 million house and it edges past the 75th percentile in Middlesex; give it a $600,000 house and it falls well below. The average filer stays below at every value in the range.12
The commissioner's office runs the rules that make this shape, so none of it is news to him. For most homeowners the education property tax is not a property tax at all. The median household's income is under the $90,000 line. The state credits back whatever the tax on the house exceeds a fixed percentage of household income. So a household earning $60,000 and one earning $89,000 pay the same share, about 2.5 cents on the dollar in Washington Central, at this year's rate on both sides of the credit. At $90,000 of income the credit covers only the first $225,000 of a home's value instead of the first $400,000. On a median-priced home that cuts the credit by two-thirds in a single dollar of income. Near $110,000 the credit is gone, and the Department's cutoff for this year's claims is $115,400. Above that the education tax is a property tax: the same dollars whatever the owner earns. Its share of income falls from there to the top.13
The municipal tax does the same, with no credit above $47,000 of income. The sales tax does the same, because spending grows more slowly than income. The income tax is the only piece of the system that leans the other way, and the commissioner wrote about it as though it were the whole.
The commissioner writes that high earners "don't suddenly have $57,000 in their bank accounts." None of the groups that cited the figure said they did. The figure is ITEP's estimate of what the top 1 percent of Vermonters keep in 2026 because Congress extended the 2017 cuts, and added new ones, instead of letting them end in 2025.14 The commissioner is right that it is measured against the cuts ending. That is the only baseline there is. The law on the books said the cuts would end, and now they will not. His own Department put the same fact to the Legislature in April, in its own words: "no material change for high income filers compared to the prior eight years."15 A cut you were about to lose, and got to keep, is worth what the challenger says it is worth. Whether Vermont should recoup it is a political question. Whether it exists is not.
Some of the commentary holds, and a whole picture would include it. A Vermonter with a million dollars of income does pay more state income tax than in Massachusetts, surtax included. The challenger's surcharge would give Vermont the highest top rate in the country.16 High incomes are often one-time events, as the commissioner says. That is why Vermont already keeps 40 percent of the gain on a business or farm sold after three years out of the tax. The law's stated purpose, as his Department quoted it in April, is to soften the effect of one-time gains.17 Wealth is not income, as he says. Vermont's estate tax reaches it once, at death, above a $5 million cutoff, for the few dozen estates a year that cross it. A gain never sold is wiped clean at death before either tax sees it.18 The tax that reaches wealth every year is the property tax, and the share of income it takes falls from the 75th percentile to the top.19
| What the commentary says | Holds? | What the record shows |
|---|---|---|
| Filers over $500,000 pay about a third of the income tax; the top 10 percent about 65 percent; the bottom half under 3 percent | Yes | Department tables for 2024: 33.0, 64.3 and 2.6 percent |
| The top 1 percent begins at roughly $500,000 | Partly | $586,634 in 2024; $527,595 in 2023; $403,561 in 2018 |
| Almost half reached the top 1 percent only once in a decade | Partly | A 2024 Department memo says "nearly 50%" of filers over $500,000, not the top 1 percent |
| Only about 700 filers hit it every year | Not verified | The Gazette found no Department or JFO document with it; the same memo says "less than 5%" |
| A million-dollar earner pays about $30,000 more than in Massachusetts; more than in all but four states | Yes | $79,000 on the Department's bracket table; about $50,000 under Massachusetts' 5 percent flat rate, whose surtax starts above $1.1 million |
| The $57,000 reflects what high earners would have paid if the 2017 cuts had expired | Partly | Right about the baseline; silent on the new provisions |
| The 2018 Legislature raised taxes on top earners to claw back the federal cut | Partly | Act 11 cut every rate including the top one and was a net cut against conforming to federal law; against 2017 Vermont law, filers over $100,000 paid slightly more, which the Department's 2026 slide calls increasing taxes on high earners |
| Vermont has one of the most progressive systems in the country | Partly | Third from the top of ITEP's list; "slightly progressive," "regressive through the top part" |
| Vermont is one of twelve states with an estate tax, the only tax on accumulated wealth | Yes, with a qualification | Twelve states and D.C.; paid by about 50 estates a year, above $5 million; the property tax also reaches wealth, every year |
What he left out was available to him. His Department publishes the tables of what each income group actually pays. The Legislature's fiscal office briefed the House on ITEP's ranking.9 The Tax Structure Commission's report sits on the state's website. His staff run the credit cliff at $90,000. He chose the revenue shares, the bank-account line and the Massachusetts bracket table. He published them on the state's site, with no disclaimer, in the last week of a campaign in which his boss is running against the tax he was arguing down.
First, a ranking among mostly regressive states, and shares of income-tax revenue, are being read as evidence of a highly progressive system. ITEP's words for its own ranking are "tilts slightly progressive" and "regressive through the top part." On the taxes modeled here, using what each income group actually paid in income tax, the share of income paid falls from the 75th percentile up. On the rate schedule instead, it is about flat to the top-1 percent threshold, then falls.20
Second, a household at the top-1 percent threshold has about $450,000 more income than a household at the 75th percentile and pays no larger share of it. On the Department's own averages it pays a smaller one, and the average top-1 percent filer pays a smaller share than the median household. High incomes in Vermont are not paying significantly more than the upper-middle class. They are paying about the same, or less.
That is the whole picture, and the office that publishes the numbers had every piece of it. Publishing half of it on the state's website a week before the election was a political act. The least Vermonters can expect from the office that publishes the numbers is the whole set.
The model, its inputs and the research behind it are in the Gazette's files and are summarized in the notes below. Each household is an owner-occupant under 65. Homes are the median market value of Vermont owners at the household's income, or $800,000 for the top two rows, with a $600,000 to $1,200,000 band. The income tax is the Department's 2024 average for the income class. The rate schedule for a married couple is shown beside it in note 18. The education tax is this year's bill after this year's credit, which the Department computes from last year's bill. Left out, with the direction of each: federal taxes. Property beyond one homestead, which means second homes, rental and business property; ITEP counts these, and they raise the top's property share. Taxes first paid by businesses and passed on in prices, 1.3 to 2.0 points on ITEP's figures, highest for the top 1 percent. Montpelier's water and sewer benefit charges, 0.28 points at the median. The tobacco excise and the sales tax on telephone service, about 0.1 point each at the median, less at the top.
Bill Shouldice, "Tax realities," Times Argus and Rutland Herald, October 27, 2026; Manchester Journal, October 25. The Department of Taxes posted the full text on its website as a blog item dated October 27, 2026, with no disclaimer, listing the Manchester Journal, Brattleboro Reformer and Caledonian Record (tax.vermont.gov). The general election is Tuesday, November 3, 2026. ↩
Amanda Janoo's platform: a 2 percent surcharge on personal income over $250,000 and 8 percent over $500,000, to fund universal primary care; Fair Share for Vermont estimates $344 million a year (VTDigger, October 7, 2026). At the October 21 Vermont Public debate she framed it as asking wealthy Vermonters to "contribute the equivalent" of their federal tax savings, citing a preliminary Public Assets Institute estimate of $260 million (Vermont Daily Chronicle, October 22, 2026). The rate she has cited has moved between 6 and 8 percent over the campaign (Vermont Public). ↩
Governor Phil Scott appointed Shouldice; the announcement is dated February 12, 2025 (governor's press release). Scott on the surcharge: "I would prefer not to raise any taxes"; he argues high earners would leave the state and is running on a package of tax cuts and credits (VTDigger, October 7, 2026). ↩
Vermont Public, 2026 governor debate, transcript published October 20, 2026 (the debate was held October 21 by the Vermont Daily Chronicle's and Seven Days' dating; Vermont Public's page says "on Wednesday"): asked whether the challenger's surcharges would discourage families from moving to Vermont, Scott said "But we have the most progressive tax system in the country, we already do tax people more the more they earn" (transcript). ↩
Department of Taxes, tax-year 2024 resident returns: filers with income over $500,000 paid $383.4 million of $1,161.6 million in net income tax, 33.0 percent; the top 10 percent of returns 64.3 percent; the bottom half 2.6 percent, net of refundable credits (AGI-class table; percentile table). The commentary's figures ("about a third," "about 65%," "a little less than 3%") match. ↩
Same percentile table: the top 1 percent of resident returns (3,298 returns, income of $586,634 and up) paid $345.9 million of net Vermont income tax on $4.81 billion of Vermont adjusted gross income, 7.19 percent, the Department's own effective-rate definition; 6.71 percent of federal adjusted gross income. By class: $500,000 to $999,999, 6.5 percent; $1,000,000 and up, 7.4 percent. ↩
ITEP ranks Vermont 49th of 51 on its Tax Inequality Index, where 1 is the most regressive; only Minnesota and the District of Columbia rank above it; six states and D.C. are not regressive overall (Appendix B; report). Quotations from ITEP's Vermont page; the report says Vermont "taxes its top 5 percent of earners at slightly lower rates than upper-middle income families." Figure 2 and the shares in the text are taxes paid by individuals (property on homes, rent and cars; sales and excise; personal income tax), read from ITEP's data workbook: middle 20 percent 7.99; fourth 20 percent 9.01; next 15 percent 9.09; next 4 percent 8.77; top 1 percent 8.05. ITEP's headline totals, which add taxes first paid by businesses, are 9.58, 10.50, 10.56, 10.32 and 10.09. ↩
Vermont Tax Structure Commission, final report, February 2021, p. 16: "Overall, Vermont's tax system is slightly progressive," and, citing an ITEP analyst, "this doesn't mean the tax system is consistently or robustly progressive"; chapter 9: "Vermont has one of the most progressive personal income tax structures in the country"; on the education tax after the credit (pp. 44 to 45): "somewhat progressive up to incomes of about $140,000, and regressive at higher incomes" (report). The Commission wrote on ITEP's 2018 edition. ↩
Joint Fiscal Office briefing to the House Committee on Ways and Means on ITEP's 7th edition, January 18, 2024, comparing ten jurisdictions that included Vermont, its neighbors and the least-regressive states: "None of the tax systems in the ten states are robustly progressive in a traditional sense" (slides). ↩ ↩2
Gazette model, 2026-27 bills (drafts/vt-tax-incidence/results.md, version 2, after two rounds of adversarial review). Incomes: the Census Bureau's 2024 American Community Survey median ($82,730) and 75th percentile ($138,800, interpolated); the Department's 2024 top-1% threshold ($586,634) and top-1% average ($1,563,682, federal adjusted gross income per return). Homes: the median market value of Vermont owners in each income bracket ($304,000; $435,000, ACS) and $800,000 for the top two rows (the Survey of Consumer Finances' top-decile median). Income tax at the Department's 2024 averages for the class: 2.7 percent ($75,000 to $99,999), 3.3 ($125,000 to $149,999), 6.5 ($500,000 to $999,999) and 6.71 (the top-1% group's average tax per return, $104,883). Middlesex FY2027 rates: homestead education $2.1691 and municipal $0.8236 per $100 of listed value, CLA 56.47 percent; Montpelier education $1.2385 and municipal, county and veterans levies $1.0522, CLA 85.99 percent; the 2026 property tax credit computed from the 2025-26 bill, as the Department does it. Sales and excise taxes (6 percent sales, 9 percent meals, 6 percent on store alcohol, vehicle purchase-and-use, state gasoline levies, Montpelier's 1 percent local option tax) on spending by category from the 2024 Consumer Expenditure Survey, the class's share of income for the first two rows and the $200,000-and-up class's dollar spending for the top rows. ↩
Everything except the income tax, as a share of income: Middlesex 6.33, 6.81, 2.87 and 1.08 percent for the four households; Montpelier 7.28, 7.82, 3.31 and 1.24. The income tax: 2.70, 3.30, 6.50, 6.71. ↩
Threshold household, Middlesex: 10.53 percent with a $1,200,000 home, 8.80 with a $600,000 home, against 10.11 at the 75th percentile; Montpelier 11.15 and 9.14 against 11.12. Average top-1% filer: 7.57 to 8.22 in Middlesex, 7.70 to 8.45 in Montpelier. ↩
32 V.S.A. § 6066: the property tax credit covers the first $400,000 of a home's equalized value for household income under $90,000 and the first $225,000 at $90,000 and over; a further credit applies at or below $47,000; the Department's ceiling for 2026 claims is $115,400 (HS-122), not a statutory figure. The income percentage is 2 percent scaled by the district's spending per weighted pupil over the $12,960 income yield in Act 169 of 2026: 2.5267 percent in Washington Central. On a $304,000 Middlesex home at this year's rates the credit falls from $1,450 at $89,999 of income to $482 at $90,000 and is gone near $110,000; the education tax is 2.53 percent of income below $90,000, 3.60 percent at $90,000, 2.68 percent at $138,800, 1.24 percent at $300,000 and 0.63 percent at $586,634. Because the credit on this year's bill is computed from last year's bill and Middlesex's rate rose 10.2 percent, the median household's actual education tax this year is 2.94 percent of income rather than the steady-state 2.53 (rate tables for 2025-26 and 2026-27). ↩
ITEP's state-by-state estimates for the 2025 federal law: Vermont's top 1 percent (incomes of $758,600 and up), average tax change in 2026 of minus $57,080 (spreadsheet). ITEP describes the bill as one that "makes permanent the provisions of the 2017 tax law that will otherwise expire" (analysis); it also made permanent provisions not in the 2017 law that reach high earners (100 percent bonus depreciation, the pass-through deduction, a $15 million estate-tax exemption), and ITEP publishes no top-1-percent split between extension and additions. ↩
Department of Taxes presentation to the House Committee on Ways and Means, April 15, 2026, "Key Takeaways": "No material change for high income filers compared to the prior eight years since the 2017 passage of the TCJA" (slides). ↩
Same Department presentation, brackets only, married filing jointly: Vermont income tax on $1,000,000 is $79,000, sixth among existing jurisdictions counting the District of Columbia (the Department's table lists it seventh, behind its own proposed 13.3 percent rate); Massachusetts, 5 percent below its 2026 surtax threshold of $1,107,750, about $50,000; at $10,000,000 Vermont $867,000 against Massachusetts $857,000. An 8 percent surcharge above $500,000 would take Vermont's top rate to 16.75 percent, the highest in the country (Tax Policy Center). ↩
32 V.S.A. § 5811(21)(B)(ii): 40 percent of the adjusted net capital gain on assets held more than three years is excluded from Vermont taxable income, capped at the lesser of 40 percent of federal taxable income or $350,000; publicly traded securities and residences do not qualify. The Department's April 2026 presentation quotes the statutory purpose: the exclusion "mitigates the impact of one-time realizations in a progressive tax structure." ↩
32 V.S.A. § 7442a: the Vermont estate tax is 16 percent of the Vermont taxable estate above $5,000,000 for deaths on or after January 1, 2021 (the exclusion was $2,750,000 through 2019 and $4,250,000 in 2020, and it is not indexed); Vermont is one of twelve states, plus the District of Columbia, with an estate tax (Tax Foundation, October 2026). A few dozen estates a year pay it: for deaths in fiscal 2024, 46 of the 87 returns filed owed tax, averaging $893,778; 60 of 103 for 2023; 53 of 88 for 2022. Collections were $14.0 million in fiscal 2022, $18.6 million in 2023, $23.9 million in 2024, $55.2 million in 2025, of which $26.4 million above forecast went to the Higher Education Trust Fund, and $32.8 million in 2026 (Administration, June 2026 revenue release; JFO, Estate Tax, House Ways and Means, 2026). The step-up: under federal law the basis of inherited property resets to its value at death (26 U.S.C. § 1014), so a gain never sold is never taxed by the income tax; Vermont adopts the federal code as of December 31, 2025 (32 V.S.A. § 5824), has no provision of its own on gains at death, and the Department applies the step-up (Ruling 2018-03). The Tax Structure Commission in 2021: for estates below the threshold, "the appreciation on the property up to the decedent's date of death permanently escapes taxation" (report, pp. 19 to 20). Nationally, unrealized gains are about a third of the net worth of the top 1 percent (Federal Reserve staff, 2013 Survey of Consumer Finances), and the federal step-up is a $40 billion-a-year tax expenditure (Treasury, FY2027 estimates, fiscal 2026). ↩
Gazette model, education plus municipal property tax as a share of income: 4.65 percent for the median household, 5.30 at the 75th percentile, 2.30 at the top-1% threshold, 0.87 for the average top-1% filer (on an $800,000 home; 1.3 percent at $1,200,000). ITEP, property taxes paid by individuals on homes, rent and cars: 3.12, 3.67, 3.58, 3.22 and 1.53 percent of income from the middle 20 percent to the top 1 percent. ↩
On the statutory schedule for a married couple with two exemptions and ordinary income (2.30, 3.39, 6.93 and 8.07 percent) instead of the Department's averages, the Middlesex totals are 8.6, 10.2, 9.8 and 9.1 percent. The gap between the schedule and what top filers actually pay is the capped capital-gains exclusion, the charitable credit, credits for taxes paid to other states and part-year apportionment; Vermont has no preferential rate on gains or pass-through income. The fact-check table draws on the Department's 2024 tables, the JFO's April 2026 slides (top-1% thresholds by year), Commissioner Bolio's March 21, 2024 memo, the Massachusetts Department of Revenue, and JFO's 2018 and 2026 descriptions of Act 11 of 2018 (June 22, 2018; April 21, 2026): Act 11 cut every rate, the top one from 8.95 to 8.75 percent, a net cut of about $30 million against the baseline in which Vermont simply conformed to the federal law; against 2017 Vermont law, JFO's March 2018 table for the House-passed version, on 2014 returns, shows filers over $100,000 paying slightly more, $269 to $289 on average at $200,000 and up. ↩
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