2021 Income Tax Withholding Instructions, Tables, and Charts
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State of Vermont Department of Taxes 2021 INCOME TAX WITHHOLDING INSTRUCTIONS, TABLES, AND CHARTS Taxpayer Services Division P.O. Box 547 Montpelier, VT 05601-0547 Email: [email protected] Phone: (802) 828-2551 Fax: (802) 828-5787 Website: tax.vermont.gov Effective 01/01/2021 • Expires 12/31/2021 • Pub. GB-1210 Page 1 of 15 DEPARTMENT OF TAXES 2021 Income Tax Withholding Instructions This document is designed to provide you with an overview of the Vermont Withholding Tax. If you need How is Vermont Income Tax further clarification, contact information for the Business Withholding Computed? Section of the Vermont Department of Taxes is found on The Vermont Income Tax Withholding is computed in page 2 of this document or by visiting our website at the same manner as federal withholding tax by using tax.vermont.gov. the Vermont withholding tables or wage bracket charts. What payments are subject to Vermont Income The filing status, number of withholding allowances, Tax Withholding? and any extra withholding for each pay period is determined from the employee’s Form W-4VT, Vermont Wages, pensions, annuities, and other payments are Employee’s Withholding Allowance Certificate. generally subject to Vermont income tax withholding if the Employees who have adjusted their federal withholding payments are subject to federal tax withholding and the in anticipation of a credit(s) and employees who are in payments are made to: civil unions or civil marriages will not have the correct 1. a Vermont resident or Vermont tax withheld unless they complete Form 2. a nonresident of Vermont for services performed in W-4VT. Vermont. Employees should complete or update Form W-4VT For further information on wages or payments subject to federal withholding tax, see IRS Publication 15 (Circular E) The Department strongly recommends that employers available at irs.gov. require their employees to complete or update Form W-4VT. Adjustments for Services Not Performed in An employer may use the information from federal Vermont Form W-4 if a Vermont form is not submitted, but there is a possibility that not enough tax will be withheld. Nonresidents: When an employee is not a Vermont This could result in a tax liability or tax owed when resident and works in Vermont and another state during employees file their taxes. If the federal Form W-4 a payroll period, compute the tax on the full payment and indicates an additional amount of federal withholding then multiply the ratio of Vermont hours to total hours. For for each pay period on Line 6, the Vermont withholding example, a nonresident employee worked in Vermont for 16 should be increased by 30% of the extra federal hours during a 40-hour pay period. If the state withholding withholding. on the wages for the entire 40 hours is $48.00, the Vermont withholding for the 16 hours is: $48.00 x 16/40 = $19.20 differ from the federal wages due to the treatment of fringe benefits affecting the employee’s partner. Residents: If a payment to a Vermont resident includes For the purpose of treating a cafeteria plan payment as pre- payment for services performed outside this state, the tax or imputing income from an employer-paid benefit, the withholding is computed on the full payment, then federal rules for the payment are applied for state purposes reduced by the income tax withheld for the state where as though the employee’s partner is a spouse. services were performed. An employee who moves into Vermont during a tax year is considered a resident for NOTE: This applies only in the case of civil unions withholding purposes. and civil marriages and not to domestic partnership arrangements. Civil Unions or Civil Marriages Vermont withholding for employees who are partners in civil unions or civil marriages is determined by the filing Tables: see page 3 status of the employee—either married filing joint or Charts: see page 5 married filing separate. The Vermont taxable wages may Page 2 of 15 Annuities, Supplemental Payments and Please note: Deferred Compensation Payments You are required to submit 1099 forms if: You must withhold Vermont income tax on payments 1. The payment was subject to Vermont to Vermont residents when federal withholding is withholding or required. Vermont withholding is also required where the 2. The payment was made to a nonresident recipient elects optional federal withholding and does not of Vermont for services performed in specifically state that the payment is exempt from Vermont Vermont. withholding. For periodic payments, the tax is computed using the Vermont wage charts or tables. For non-periodic on the W-2 and/or 1099 forms. Form WHT-434 and Forms payments, the Vermont withholding can be estimated at W-2 and 1099 may be filed for 2018 on our online filing site 30% of the federal withholding. In all cases, the taxpayer at.myVTax.vermont.gov. is responsible for ensuring that the correct amount is The commissioner of taxes has mandated the electronic withheld to avoid underpayment of the Vermont tax filing of Form WHT-434 and the accompanying forms liability. for all employers who will submit 25 or more W-2 and/or 1099 forms. Payroll filing services have been mandated to Payments Under a Non-Qualified Deferred submit all filings electronically. Compensation Plan When a person makes a payment that was previously Combined Fed/State Program deferred under a non-qualified deferred compensation The Vermont Department of Taxes is no longer plan, the correct withholding rate is 6% of the deferred participating in the Combined Fed/State program for payment. The withholding is based on both the deferred submitting W-2 and 1099 forms with the IRS. You must payment and any income that may be derived from the file these forms directly with the Department. deferred compensation. Contact Information for the Department of Reporting and Remitting Vermont Income Tax Taxes and Other Government Agencies Withheld Vermont Department of Taxes, Taxpayer Services Division If you pay wages or make payments to Vermont income Mail: PO Box 547 tax withholding, you must register with the Vermont Montpelier, VT 05601-0547 Department of Taxes for a withholding account. You may Email: [email protected] register online at myvtax.vermont.gov, or you may register Phone: (802) 828-2551 using Form BR-400, Application for a Business Tax Account Fax: (802) 828-5787 found at tax.vermont.gov/forms. Internal Revenue Service (Federal income tax) The Department will determine your filing frequency based on your annual withholding totals. You may Website: irs.gov file your returns and remit the tax online easily and Phone: (800) 829-1040 conveniently at myvtax.vermont.gov, or you may file using Social Security Admin. (Social Security/Medicare tax) paper forms available at tax.vermont.gov/forms. Website: ssa.gov Phone: (800) 772-1213 Filing Forms W-2 and/or 1099 Vermont Department of Labor (unemployment insurance, All employers are required to file Form WHT-434, Annual minimum wage, overtime, worker comp.) Withholding Reconciliation. This form serves as the Website: labor.vermont.gov transmittal for Forms W-2 and/or 1099 and reconciles the Phone: (802) 828-4000 amount of Vermont income tax withholding reported during the year to the amount of withholding tax shown E-file your withholding tax forms atmyVTax.vermont.gov . Find more information on withholding tax at tax.vermont.gov. Page 3 of 15 Vermont Percentage Method Withholding Tables (for wages paid in 2021) WEEKLY PAYROLLS Single Married If Wages* are: If Wages* are: over but not over Vermont withholding is: over but not over Vermont withholding is: $0 $61 $0 of amount over $0 $183 $0 of amount over 61 849 0 + 3.35% $61 183 1,499 0 + 3.35% $183 849 1,969 26.40 + 6.60% 849 1,499 3,363 44.09 + 6.60% 1,499 1,969 4,041 100.32 + 7.60% 1,969 3,363 5,028 167.11 + 7.60% 3,363 4,041 - 257.79 + 8.75% 4,041 5,028 - 293.65 + 8.75% 5,028 *use wages after subtracting withholding allowances (one withholding allowance equals $84.62) BIWEEKLY PAYROLLS Single Married If Wages* are: If Wages* are: over but not over Vermont withholding is: over but not over Vermont withholding is: $0 $122 $0 of amount over $0 $366 $0 of amount over 122 1,697 0 + 3.35% $122 366 2,997 0 + 3.35% $366 1,697 3,938 52.76 + 6.60% 1,697 2,997 6,726 88.14 + 6.60% 2,997 3,938 8,082 200.67 + 7.60% 3,938 6,726 10,057 334.25 + 7.60% 6,726 8,082 - 515.61 + 8.75% 8,082 10,057 - 587.41 + 8.75% 10,057 *use wages after subtracting withholding allowances (one withholding allowance equals $169.23) SEMIMONTHLY PAYROLLS Single Married If Wages* are: If Wages* are: over but not over Vermont withholding is: over but not over Vermont withholding is: $0 $132 $0 of amount over $0 $397 $0 of amount over 132 1,839 0 + 3.35% $132 397 3,247 0 + 3.35% $397 1,839 4,266 57.18 + 6.60% 1,839 3,247 7,286 95.48 + 6.60% 3,247 4,266 8,755 217.37 + 7.60% 4,266 7,286 10,895 362.05 + 7.60% 7,286 8,755 - 558.53 + 8.75% 8,755 10,895 - 636.33 + 8.75% 10,895 *use wages after subtracting withholding allowances (one withholding allowance equals $183.33) MONTHLY PAYROLLS Single Married If Wages* are: If Wages* are: over but not over Vermont withholding is: over but not over Vermont withholding is: $0 $265 $0 of amount over $0 $794 $0 of amount over 265 3,677 0 + 3.35% $265 794 6,494 0 + 3.35% $794 3,677 8,531 114.30 + 6.60% 3,677 6,494 14,573 190.95 + 6.60% 6,494 8,531 17,510 434.67 + 7.60% 8,531 14,573 21,790 724.16 + 7.60% 14,573 17,510 - 1,117.07 + 8.75% 17,510 21,790 - 1,272.66 + 8.75% 21,790 *use wages after subtracting withholding allowances