Vermont allows an exclusion of up to the first $10,000 of military retirement pay for taxpayers with AGI not exceeding the following caps (subject to annual revision):
- MFJ - $65,000, thereafter phasing out and eliminated at $75,000.
- All others - $50,000, thereafter phasing out and eliminated at $60,000.
If annual gross income exceeds the cap, no exemption is allowed.
Note: A taxpayer can only claim one of the following exemptions, even if more than one applies: Social Security Exemption; Military Retirement Exemption; Civil Service Retirement System Exemption; Other Retirement System Exemption.
To exempt the military retirement pay from the Vermont individual income tax return in TaxSlayer ProWeb, from the Vermont Return menu select:
- Subtractions from Income
- Retirement income from the Civil Service, Military, or State or Federal Government (IN-112) - Enter the qualified military retirement income as a positive number.
Additional Information:
Vermont DOT: Exemption for Military Retirement Income
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