Key figures
Vermont advisory
2026, with sources
The R&D credit
Vermont’s research and development credit piggybacks on the federal one: a company that takes the federal research credit can claim 27% of it for eligible expenditures made in Vermont. It applies against the corporate income tax or, for pass-through owners, the personal income tax, and unused credit carries forward up to 10 years.
Two things set it apart. It is not refundable, so a pre-profit startup banks it for later, where it competes with the minimum tax that credits can’t reduce. And the Department of Taxes publishes a list of every company that claimed the credit in the most recent calendar year, so claiming it is public.
For a Burlington startup with a $100,000 federal research credit, of which $60,000 relates to Vermont work, the Vermont credit is $16,200, usable over the next ten years.
Where founders go wrong in Vermont
Vermont rewrote three rules in quick succession: the corporate tax in 2023, the Child Care Contribution in 2024, and SaaS taxability in July 2024. Guidance written before those dates, including much of what turns up in a search, is wrong now.
- Assuming SaaS is still exempt: remotely accessed software has been taxable since July 1, 2024.
- Forgetting the Child Care Contribution when setting up payroll.
- Missing the annual report, due 2½ months after year end, $250 for a foreign corporation.
- Paying a fired employee on the next payday instead of within 72 hours.
- Not tracking NOL expiry: Vermont losses last 10 years.
The federal baseline
This page covers what Vermont adds. The federal rules underneath it apply here too.
Common questions
Is there a Vermont R&D credit?
Yes, if you claim the federal research credit on Vermont expenditures. Vermont’s credit is 27% of the federal credit allowed for the year, applies against corporate or personal income tax, and carries forward 10 years. It isn’t refundable, and the Department publishes the names of companies that claimed it each year.
What costs surprise companies hiring in Vermont?
Mostly the payroll costs. Vermont’s Child Care Contribution adds 0.44% of wages, and Vermont’s minimum tax applies every year regardless of profit. Neither is large, but both run from the first employee and the first dollar of receipts.
Advisory next door
- MAMassachusetts advisoryMassachusetts offers a research credit with a long carryover, a 4% surtax on income over $1,107,750 that a share sale can trigger, and a strict ABC test for contractors.
- NHNew Hampshire advisoryNew Hampshire’s R&D credit is 10% of incremental in-state research wages, capped at $50,000 per company and drawn from a $7 million pool. The bigger planning item is the BET.
- NYNew York advisoryNew York’s incentives are refundable but by application, through Empire State Development. The 2026 budget kept the 7.25% cliff rate, decoupled from R&E expensing, and left QSBS alone.
Founder guides on this
- R&D taxThe R&D tax credit and Section 174A for startupsEngineering salaries can earn a federal R&D credit against payroll tax, and Section 174A lets you deduct US research again. What qualifies, what to track.
- ComplianceFirst-year compliance calendar for a Delaware C-corpDelaware franchise tax, 1099s, the federal return, payroll filings, state annual reports and sales tax: the deadlines a young C-corp misses most, by month.
- RunwayBurn rate and runway: how to calculate them correctlyGross burn, net burn and months of runway, done the way an investor checks them: from cash, averaged, and with the hires you’ve already committed to.
More of the Vermont guide
- AccountingAccounting and state tax in VermontCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in VermontSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in VermontPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollPayroll taxes and employer rules in VermontWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in VermontRegistering to do business, annual reports, franchise tax and the filing calendar
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.