Short-Term Rental Taxes in Vermont: What Investors Need to Know in 2025
Vermont does NOT conform to federal bonus depreciation AND has a top income tax rate of 8.75%. For high-income investors, the combination of non-conformity and high rates means a substantial year-one state tax penalty when taking large cost seg deductions. Plan carefully with a VT CPA.
Vermont's STR market is anchored by world-class ski resorts (Stowe, Killington, Mad River Glen, Sugarbush) and supplemented by fall foliage tourism and summer outdoor recreation. The state's tax environment is challenging for investors: a top income tax rate of 8.75%, non-conformity to federal bonus depreciation, and a 9% meals and rooms tax. However, the strength of Vermont's ski and foliage markets can still support compelling after-tax returns.
Vermont State Income Tax on Rental Income
Vermont has one of the most progressive income tax structures in the country, with rates from 3.35% to 8.75%. The top 8.75% rate applies to income over approximately $213,150 for single filers. Most STR investors with meaningful rental income from premium ski properties will reach upper Vermont brackets. Vermont's non-conformity to bonus depreciation means this high rate applies to the full year-one income without the benefit of large first-year depreciation deductions on the state return.
Vermont's Meals and Rooms Tax
| Market / Area | State M&R Tax (9%) | Local Option | Estimated Total |
|---|---|---|---|
| Stowe (Lamoille County) | 9% | 1% | ~10% |
| Killington (Rutland County) | 9% | 1% | ~10% |
| Manchester / Bromley / Magic (Bennington County) | 9% | 1% | ~10% |
| Woodstock / Quechee (Windsor County) | 9% | 1% | ~10% |
| Burlington (Chittenden County) | 9% | 1% | ~10% |
| Mad River Valley (Washington County) | 9% | 1% | ~10% |
Vermont Ski Country STR Markets
Stowe: Vermont's most iconic resort town and consistently ranked among the top ski destinations in the East. Stowe Mountain Resort (owned by Vail Resorts) features 485 acres of skiable terrain and a charming village. The Stowe STR market is competitive and highly seasonal — peak winter season commands extremely high nightly rates, but summer and fall bring their own demand from hikers, cyclists, and foliage seekers.
Killington: The largest ski resort in the East by skiable acreage, with 155 trails and 22 lifts. Killington draws a younger, more party-oriented crowd than Stowe and operates one of the longest ski seasons in the East (typically November through late April or May). The Killington STR market tends to offer more accessible property prices than Stowe, with competitive revenue potential.
Mad River Valley: Home to Sugarbush and Mad River Glen, the Mad River Valley attracts a more dedicated skier demographic. The Valley has a Vermont-authentic character and loyal following. STR properties here range from ski-in condos at Sugarbush to farmhouses and chalets in the surrounding hills.
Vermont Foliage and Summer Tourism
Vermont's fall foliage season (late September through mid-October) is a genuine second peak for the STR market — in some areas, foliage weekend demand rivals ski season. Nightly rates in October can approach or exceed peak ski season rates. Summer brings cycling (Kingdom Trails, VAST trail network), hiking, lake activities, and general rural escape tourism. Vermont's four-season appeal distributes revenue more evenly than one-season markets.
Cost Segregation in Vermont: Federal Benefits Despite High State Tax
Vermont's high state income tax and non-conformity to bonus depreciation create a scenario where the federal benefit is large but the state timing penalty is also larger than in most states. For a $700,000 Stowe ski property with $175,000 in cost seg deductions at 37% federal, the year-one federal savings are $64,750. The VT state timing penalty at an 8% effective rate on $175,000 of disallowed deductions is approximately $14,000 in year one — meaningful but recovered over subsequent years. Net year-one benefit: $50,750+.
Estimate Your Vermont STR Tax Savings
Vermont's premium ski markets generate strong revenue and large federal cost seg deductions despite the state timing penalty. Get your free estimate.
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