VT · Payroll tax 2026
The true cost of hiring in Vermont
What a W-2 employee actually costs an employer in Vermont— and how that compares to a 1099 contractor — with the state's real 2026 unemployment-insurance rates built in.
Hiring a W-2 employee in Vermont means accounting for payroll obligations that stack on top of the agreed salary. New employers pay a 1% state unemployment insurance (SUI) rate on the first $14,800 of each worker's wages — a maximum SUI exposure of $148 per employee in the first year. That figure sits below the national median wage base, but it compounds quickly across a growing team. Vermont's economy is anchored in healthcare (University of Vermont Medical Center is the state's largest employer), precision manufacturing, specialty food production, and a tourism sector concentrated around Burlington, Stowe, and the ski corridor. These industries mix salaried W-2 workers with seasonal contractors — a pattern that puts misclassification risk front and center for small operators. Vermont does impose a state income tax on wages, so employers must withhold state income tax in addition to federal obligations. Total employer cost on a $60,000 salary will include federal FICA (7.65% on applicable wages), FUTA, Vermont SUI on the first $14,800, and any voluntary benefits load. Use the calculator above to model the exact fully-loaded number before you send an offer.
Estimate a Vermont hire
Pre-filled with Vermont's 1% new-employer SUI rate. Adjust salary, benefits, and the 1099 rate to fit your hire.
Vermont employer tax facts
| Item | VT |
|---|---|
| New-employer SUI rate | 1% |
| SUI taxable wage base | $14,800 |
| Federal FICA (employer) | 7.65% |
| FUTA | 0.6% |
| State income tax on wages | Yes |
| Worker classification test | ABC test |
Example: a $75,000 hire in Vermont
At a $75,000 base salary with typical benefits, a W-2 employee in Vermont costs an employer $99,228 per year — $24,228 above base pay. An equivalent 1099 contract at $75,000 would cost $24,228 less; the breakeven contract rate is $99,228.
Misclassification risk in Vermont
Test: ABC test
ABC test; fines up to $10,000 per violation (21 V.S.A. §342).
Penalties by stateCompare nearby rates
Vermont's 1% new-employer SUI rate sits near Alaska (1%), Delaware (1%), Idaho (1%), Iowa (1%). See the full 51-state comparison or the 2026 employer payroll tax reference.
Vermont hiring-cost FAQ
- What is the Vermont new-employer SUI rate and taxable wage base?
- New employers in Vermont pay a 1% state unemployment insurance rate on the first $14,800 of each employee's wages per year, for a maximum SUI cost of $148 per worker annually. Experienced-employer rates vary based on the employer's unemployment claims history.
- Does Vermont withhold state income tax from employee wages?
- Yes. Vermont imposes a state income tax on wage income, so employers must withhold Vermont state income tax from each W-2 employee's paycheck and remit it to the Department of Taxes. This requirement applies regardless of whether the employee works remotely or on-site within the state.
- What happens if Vermont determines a worker was misclassified as an independent contractor?
- Vermont applies the ABC test to determine worker status under 21 V.S.A. §342, and misclassification carries fines of up to $10,000 per violation. Because each affected worker can constitute a separate violation, a small team of misclassified contractors can produce six-figure liability quickly.