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Your Ultimate Guide to US Payroll in Vermont

Managing payroll in Vermont? Read our state-by-state guide to US payroll taxes to learn what you must withhold and deduct from employee wages.

Jemima Owen-Jones
Written by Jemima Owen-Jones
August 7, 2023

Key takeaways

  1. Employers must pay unemployment insurance in the state of Vermont.
  2. Personal income tax must be deducted from the employee’s wages and withheld by the employer.
  3. Vermont employers must pay for workers’ compensation, even if they only have one Vermont employee.

Employers must navigate various regulations and requirements to ensure proper payroll withholding in each US state. This guide explains what employers must pay and withhold from payroll in Vermont, including unemployment insurance, personal income tax, and workers’ compensation. 

Paying unemployment insurance 

On top of withholding federal taxes such as Medicare and Social Security taxes, you are also responsible for withholding and paying certain Vermont state taxes from your employee’s payroll. These taxes together are referred to as employer payroll taxes or payroll withholding. One of the taxes you must pay is unemployment insurance (UI). 

Unemployment insurance is a national program administered by the US Department of Labor and provides temporary payments to people who are unemployed through no fault of their own. You can manage your Vermont unemployment insurance through the online portal. For more information on paying your unemployment insurance, refer to the Vermont Department of Labor

Withholding personal income tax from your Vermont employee 


Employers are also responsible for withholding personal income tax from their employee’s payroll. Personal income tax, also known as individual income tax or state income tax, is a tax on the income of Vermont residents. The tax is deducted from the employee’s wages and is withheld by the employer.

After you withhold the tax from your employee, you are responsible for paying the amount you withheld to the state. You can file and pay the withholding amount online. For more information on paying the withholding amount, refer to the Vermont Department of Taxes

Paying your Vermont workers’ compensation

In addition to paying Vermont payroll taxes, employers must also pay for workers’ compensation, even if they only have one Vermont employee. 

Workers’ compensation is a type of insurance that covers wages and medical benefits for employees who are injured while performing their job. The state of Vermont provides information online to help you find a qualified commercial carrier. Employers should verify that their workers’ compensation insurance complies with the state’s regulations for workers’ compensation.

Simplify US payroll tax compliance with Deel

While this guide provides essential information on Vermont payroll taxes, payroll compliance, and state requirements extend beyond what is covered above. To streamline the process and ensure full compliance, companies can turn to Deel. 

Deel offers a comprehensive solution for managing US and international payroll, including payments, taxes, worker classification, and more. Speak with an expert today to see how you can streamline your US payroll processes and ensure compliance with state regulations.

Disclaimer: This article is provided for general informational purposes and should not be treated as legal or tax advice. Consult a professional before proceeding.

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