Vermont Estate & Inheritance Tax — Best Proven Guide (2026)

✓ Verified June 2026

This guide explains Vermont estate tax and inheritance tax in plain English — whether Vermont taxes your estate, who pays, the exact exemptions, and how the federal estate tax fits in for 2026. All figures verified as of June 2026.

Vermont Estate & Inheritance Tax at a Glance

Here is exactly how Vermont estate tax and inheritance tax work:

Spousal portability (federal): Yes, the federal estate tax exemption allows spousal portability — a surviving spouse may elect to use the deceased spouse’s unused federal exemption amount (DSUE). However, Vermont does NOT permit portability of its state estate tax exemption.

Gift tax: Vermont does not have a separate state gift tax. Vermont’s gift tax statute was repealed in 1979. However, Vermont includes any adjusted taxable gifts made within two years of death as part of the taxable estate for state estate tax purposes. The federal gift tax annual exclusion is 19000 per recipient for 2026.

Estate Tax vs Inheritance Tax: The Difference

People use these two terms as if they mean the same thing, but they are different taxes that work in opposite ways. An estate tax is charged to the estate itself before anything is handed out — the estate pays it, then the heirs receive what is left.

An inheritance tax is charged to the people who receive the money — each heir may owe tax on their share, and the rate often depends on how closely related they were to the person who died.

This matters for Vermont families because the two taxes are set by different rules. The federal government only has an estate tax, never an inheritance tax. A state can have an estate tax, an inheritance tax, both, or — as in most states — neither. When you know which one (if any) applies in Vermont, you know exactly who would be responsible for paying.

How the Federal Estate Tax Works

No matter which state you live in, the federal estate tax sets a very high exemption, which is the amount an estate can be worth before any federal tax is owed. Estates below that exemption owe no federal estate tax at all, and the overwhelming majority of estates fall well below it.

For 2026, the federal exemption is $15 million per person — a level the One Big Beautiful Bill Act made permanent in 2025 and indexes for inflation — so the figure in the table above is current and is not scheduled to drop.

Married couples get an extra advantage. Anything left to a surviving spouse passes free of federal estate tax under the unlimited marital deduction, and a surviving spouse can often carry over the unused portion of their late spouse’s exemption — a feature called portability. In practice this means a married couple can shield roughly double the individual exemption before federal estate tax ever enters the picture.

Who Actually Owes Estate Tax in Vermont

Most Vermont families will owe no state estate tax because the 5000000 exemption covers the vast majority of estates. Families with estates approaching or exceeding that threshold — including real estate, retirement accounts, life insurance proceeds, and other assets — may wish to consult a licensed estate planning attorney or tax professional.

Vermont’s exemption is significantly lower than the federal 15000000 exemption, so some estates may owe Vermont estate tax even when no federal estate tax is due.

Other Vermont estate/inheritance tax rules: Vermont imposes a flat 16 percent rate on the taxable estate above the 5000000 exemption (not a graduated rate). Vermont does not allow portability of its state exemption between spouses. Adjusted taxable gifts made within two years of death are included in the Vermont taxable estate.

The estate must file Vermont Form EST-191 if the federal gross estate plus adjusted taxable gifts made within two years of death exceeds 5000000. A tax clearance from the Vermont Department of Taxes (Form E-2A) is required before the probate court will close the estate.

What This Means for Your Vermont Family

The bottom line for Vermont: most families still owe little or nothing, but because Vermont has a state-level death tax, it is worth checking the exemption and rate in the table above against the size of the estate. If the estate is close to or above the Vermont threshold, a licensed tax professional in Vermont can help you plan ahead and reduce what is owed.

Either way, planning ahead helps. Keeping beneficiary designations current, holding property in the right way, and — for larger estates — talking to a tax professional can keep more of what you have built in your family’s hands. None of this requires owing estate tax; it is simply good estate planning.

It also helps to know what an estate tax does not touch. Life insurance paid to a named beneficiary, retirement accounts with named beneficiaries, and assets held in certain trusts generally pass outside the taxable estate, which is one reason these tools are so common in planning.

Day-to-day inheritances that most Vermont families receive — a home, a bank account, a car, personal belongings — are almost never large enough to trigger any estate tax at all. If you are unsure where your family stands, the safest step is a short conversation with a licensed Vermont estate or tax professional who can look at the actual numbers.

Understanding Vermont Estate and Inheritance Tax

Worrying about Vermont estate tax is common, but most families owe nothing. Whether Vermont estate tax applies depends on the size of the estate and whether Vermont levies an estate tax, an inheritance tax, or neither. The table above shows the exact exemptions and rates, plus the current federal exemption, so you can see where you actually stand on Vermont estate tax.

If your estate is large enough that Vermont estate tax could apply, a licensed tax professional in your state can help you plan.

Official Vermont Sources & Resources

• Vermont Department of Revenue: https://tax.vermont.gov/individuals/estate-tax
• Vermont Estate Tax Statute: https://legislature.vermont.gov/statutes/chapter/32/190
• Internal Revenue Service — Estate Tax: irs.gov
• Cornell Legal Information Institute: law.cornell.edu/wex

This Vermont estate-tax guide was last verified against official sources in June 2026. Tax laws and exemptions change yearly — verify with your state revenue department or a licensed tax professional.

More Vermont Wills & Probate Guides

• Vermont Wills & Estate Planning
• Vermont Probate Process
• Dying Without a Will in Vermont
• Vermont Small Estate Affidavit
• Vermont Living Trust
• Probate Cost Calculator
• All 51 States

Disclaimer: This guide is informational only and is not legal or tax advice. Estate, probate, and tax laws change and vary by state and county. Verify current rules and dollar figures with your state’s court, statute, or a licensed attorney or tax professional before acting. For urgent matters like an active probate or a tax deadline, consult a licensed professional in your state right away.