Vermont Bonus Tax Calculator:

Yes. Vermont treats bonuses as taxable wages and generally requires Vermont income tax withholding on bonus and other supplemental wage payments. Vermont uses a progressive state income tax system rather than a flat state income tax rate.

When a bonus is paid, federal withholding, Social Security, Medicare, Additional Medicare, and Vermont state income tax withholding may apply. You can use the calculator above, powered by Beyond HCM, to estimate Vermont withholding, federal withholding, and take-home pay for bonus payments. The calculator uses 2026 federal payroll assumptions and current Vermont withholding estimates.

How to Calculate Bonus Tax in Vermont

Supplemental wages—including bonuses, commissions, overtime pay, back pay, and certain additional wage payments—are generally treated as wages for withholding purposes.

For Vermont withholding:

– Vermont imposes state income tax on wages
– Vermont does not have a statewide employee Temporary Disability Insurance (TDI) contribution
– Vermont bonus withholding may be estimated using Vermont supplemental withholding guidance or an annualized progressive withholding estimate
– Vermont employees may complete Form W-4VT for state withholding purposes

For federal withholding:

– 22% applies to most supplemental wages
– 37% applies to supplemental wages above $1 million in a calendar year

Key Information on Vermont Bonuses

How Are Bonuses Paid in Vermont?

Employers may issue bonuses through:

– Check
– Direct deposit
– Pay card

How Do Bonuses Work?

Bonuses are treated as taxable compensation. They are generally subject to:

– Federal income tax withholding
– Vermont state income tax withholding
– Social Security tax
– Medicare tax

They are typically reported on the employee’s Form W-2 at year-end.

What Is the Vermont Bonus Tax Rate?

Vermont does not have a separate bonus-only tax rate. Instead, bonus payments are generally treated as taxable wages for Vermont income tax withholding purposes.

For 2026:

– Vermont bonus withholding may be estimated using Vermont supplemental withholding guidance or a progressive withholding calculation
– Federal supplemental withholding generally applies to bonus payments
– FICA taxes, including Social Security and Medicare, generally apply

Are Bonuses Taxed Differently Than Standard Pay?

At the Vermont level, bonuses are generally treated as taxable wages and may be included in Vermont state income tax withholding.

At the federal level, bonuses may be taxed using the supplemental wage method, typically 22% when paid separately, subject to the higher $1 million rule.

How Much Tax Is Taken Out of a Bonus?

For most bonus payments in Vermont, estimated withholding may include:

– 22% federal supplemental withholding in most cases
– Vermont state income tax withholding
– FICA taxes, including Social Security and Medicare
– Additional Medicare tax, if applicable

The exact amount taken from a bonus may vary depending on the employer’s payroll setup, the employee’s year-to-date wages, federal thresholds, state withholding assumptions, Form W-4VT details, and how the bonus is processed.

Important

This calculator is provided for informational and estimation purposes only. Actual payroll tax withholdings may vary based on an employee’s tax elections, payroll setup, federal withholding rules, Vermont withholding requirements, and how the bonus is processed. Employers should consult a qualified tax, legal, or payroll professional for official calculations.

If you need help with payroll processing, withholding setup, or tax compliance in Vermont, the Beyond HCM team is available to help.

Estimate only — not legal or tax advice. Need help managing Vermont payroll more confidently? Contact Beyond HCM for support.