Vermont Estate Taxes

Vermont is one of the few states that still imposes an estate tax.  The Vermont Department of Taxes is responsible for administration of the estate tax laws in effect for Vermont.  The current laws related to estate tax in Vermont have been in place since December 31, 2008 and apply to those who died during 20123.

Following is an overview of the current estate tax laws in effect for Vermont.  For more information about federal income taxes, please visit our web site’s “Tax Relief” page.

What are estate taxes?

An estate refers to the possessions someone leaves behind at the time of his or her death.  Normally when a person dies his or her property passes to family, friends, or others through a will.  In cases that person does not have a will, the property passes to others under the guidance of applicable state or federal probate laws.

For the transfer of property through an estate, various government bodies—which can be the government of those states that have estate tax laws and the federal government through the Internal Revenue Service (IRS)—impose tax on the estate related to the transfer of property from one person to another at the time of death.  As the property is going to a person or persons who did not pay for the property or an interest in the property, the transfer is treated as income when it exceeds a certain value or amount.  Therefore, a tax is imposed on that value, which is known as the estate tax.

Who is required to file an estate tax return in Vermont?

The executor of an estate is required to file an estate tax return if the decedent was a resident of Vermont or the estate includes real or tangible personal property actually located in the state of Vermont.

What is the value threshold when estate taxes apply in Vermont?

If the decedent died after December 31, 2012, the estate of a decedent must pay Vermont estate tax if the gross estate has a value of at least $2,750,000.

What forms does Vermont require the executor to file related to Vermont estate taxes?  Where must those forms be filed?

If the decedent was a resident of Vermont at the time of his or her death, the decedent’s estate must file Form E-1 Estate Tax Return.  In addition, the federal estate tax Form 706 must be completed as well to calculate the tax owed.

Estate tax forms may be mailed to the following address:

Vermont Department of Taxes

133 State Street

Montpelier, VT 05633-1401

When are Vermont estate taxes due?

An executor must file and pay Vermont estate taxes within nine months of a decedent’s death.  An executor may obtain an extension of time to file estate taxes for up to six months.  The request is an extension of time to file the estate tax return, not an extension of time to pay any estate tax owed.

If any estate tax owed is not paid by the original due date, the estate will be assessed interest and a penalty based on the amount of the unpaid estate tax due.

Where can I get help if I have additional questions about Vermont estate taxes or other taxes?

If you have questions about estate taxes, income taxes, or any other tax issues, you can get answers to your questions by calling the telephone number located at the top of this web site.  A tax attorney will get in touch with you to have an initial conversation about your tax questions.  This conversation is completely confidential, free of charge, and does not obligate you to anything further.

Therefore, you have every reason to make the call and get the tax help you need today.

by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.