Key figures
Vermont payables
2026, with sources
1099s with the annual reconciliation
Vermont is outside the IRS Combined Federal/State Filing program, so state copies go directly to the Department of Taxes. Every withholding account files Form WHT-434, the annual reconciliation, with its W-2s and 1099s by January 31; Part II of the form reports Vermont non-wage payments and any Vermont tax withheld from them. Filers with more than ten W-2s and 1099s combined must use myVTax, which accepts bulk files in the IRS Publication 1220 format with the Vermont account number in the payee record.
Use tax on software
From 2015 to June 30, 2024, Vermont exempted prewritten software that was accessed remotely and not downloaded. Act 183 of 2024 ended that: since July 1, 2024 all prewritten software is taxable however it is delivered. A Vermont company’s own SaaS stack is therefore subject to 6% use tax when the vendor doesn’t collect, and 7% in towns with the 1% local option.
A 12-person Vermont company spending $90,000 a year on software from vendors that don’t collect owes $5,400 of use tax a year at 6%. Many companies that set up before 2024 never started tracking it.
Vendor checks
Uncashed vendor checks become unclaimed property, reported and remitted to the State Treasurer by May 1; the Treasurer publishes a dormancy chart by property type.
Deadlines
- Jan 31Annual reconciliation with W-2 and 1099 copiesForm WHT-434 with 1099s
The federal baseline
This page covers what Vermont adds. The federal rules underneath it apply here too.
Common questions
How do 1099s get to Vermont?
Directly. Vermont is not part of the IRS Combined Federal/State Filing program. Forms 1099 are filed with the Department of Taxes along with the annual Form WHT-434 by January 31, and anyone filing more than ten W-2s and 1099s combined must file through myVTax.
Do we owe use tax on our SaaS subscriptions?
Yes, since July 1, 2024. Before that, remotely accessed software was exempt. Act 183 made all prewritten software taxable regardless of delivery, so SaaS bought from a vendor that doesn’t collect Vermont tax owes 6% use tax, plus 1% in towns with a local option tax.
Payables next door
- MAMassachusetts payablesMassachusetts wants 1099s filed directly with DOR, applies a strict ABC test to contractors, and taxes the SaaS a startup buys at 6.25% when the vendor doesn’t collect.
- NHNew Hampshire payablesNew Hampshire has no sales or use tax and doesn’t tax wages or contractor income, so there is no state 1099 copy and no use tax on software. Classification still matters for unemployment.
- NYNew York payablesNew York wants a written contract for freelancers and a new-hire report for contractors over $2,500. Untaxed software purchases owe use tax, and stale vendor checks escheat after three years.
Founder guides on this
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- The closeWhy startups should close their books every monthA monthly close turns a bank balance into numbers an investor, an auditor or a 409A firm will accept. What it is, and why it gets expensive to skip.
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
- 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
- AdvisoryAdvisory: credits and decisions in VermontCredits, incentives and the decisions that are cheaper to get right the first time
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.