Gambling winnings tax in Vermont

Vermont taxes your gross gambling winnings and allows no deduction for losses, so a losing year can still produce a state tax bill.

Checked against Vermont’s own sources on 2026-10-05.

In short

If you get Social Security, a win can cost you some or all of Vermont’s exemption for it. The exemption phases out as your federal AGI goes from $55,000 to $65,000, or from $70,000 to $80,000 joint.1
If your federal adjusted gross income is above $150,000, you owe Vermont at least 3 percent of it. A win can make this minimum apply only by taking your federal AGI past $150,000, and only when your Vermont deductions and exemptions are large.11

How Vermont treats gambling losses

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Vermont does not let a casual gambler offset winnings with losses at all, so how you file federally makes no difference to the state figure.

The two examples below are the same numbers the calculator uses, worked at Vermont rates.

Two examples, worked at 2026 Vermont rates

A single filer with $60,000 of other income who takes the standard deduction on everything except gambling losses.

A losing year

You win $50,000 and lose $52,000, so you finish down $2,000.

Federal: $3,596
Vermont: $3,170
Total: $6,766

You finished the year down and still owe tax.

Federally you itemize, so your losses offset your winnings, but the 2026 rule caps that deduction at 90 percent and leaves $3,200 taxable. Vermont starts from your federal income and allows no deduction for gambling losses, so the full $50,000 is taxed at 6.6 percent, less $130 because your standard deduction and personal exemptions come off your income first, so the win starts lower in the rate bands, which comes to $3,170.

A winning year

You win $50,000 and lose $10,000, so you finish up $40,000.

Federal: $10,350
Vermont: $3,170
Total: $13,520

Federally you take the $16,100 standard deduction, which is worth more than itemizing, so your gambling losses do not reduce your federal tax at all. Vermont starts from your federal income and allows no deduction for gambling losses, so the full $50,000 is taxed at 6.6 percent, less $130 because your standard deduction and personal exemptions come off your income first, so the win starts lower in the rate bands, which comes to $3,170.

Vermont income tax rates, 2026

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Single filer thresholds. Other filing statuses use different bands.

Taxable income	Rate
$0 to $50,750	3.35 percent
$50,750 to $122,850	6.6 percent
$122,850 to $256,300	7.6 percent
$256,300 and above	8.75 percent

The calculator also applies what this table leaves out: the standard deduction and personal exemptions, taken before the table.

Withholding on winnings

Vermont withholds 6 percent. The rule in the state's sources:

the state lottery: above $5,000.

These sources give no rule for other kinds of bet, so do not assume tax was withheld on one.

Withholding is a credit against the bill, not the bill itself. It does not settle what you owe.

The federal 90 percent loss limit in Vermont

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From tax year 2026 the federal deduction for gambling losses is cut to 90 percent of what you lost, and never more than what you won. Public Law 119-21 did it, at section 70114(a), by rewriting 26 U.S.C. 165(d).

Vermont allows no loss deduction at all, so the federal limit changes your federal bill and not your Vermont bill.

Vermont follows the federal code as it stood on 2025-12-31. The paragraph above says what this means for the federal 90 percent limit.

If you do not live in Vermont

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Vermont taxes a nonresident on proceeds from wagering transactions made within the state and on Vermont lottery tickets bought in Vermont. A resident gets a credit for income tax paid to another state.

The calculator works the bill for somebody who lives in Vermont. It does not apportion income between states, so a nonresident return is not what the figure above describes.

More about Vermont

Gambling losses

No Vermont source says in those words that gambling losses are not deductible. The rule follows from how Vermont works out taxable income, not from a direct statement in the law.

Withholding

The withholding rule above is confirmed only for lottery prizes. For a nonresident, Vermont law (32 V.S.A. 5823(b)(6)) lets the tax commissioner require withholding on winnings from wagering in Vermont, but we did not find a rule or notice that requires it for sports wagering.

The 2026 rates

The 2026 rates on this page are the "2026 Preliminary Vermont Tax Rates" from the 2026 Form IN-114 instructions. No final 2026 schedule is published yet. The 2025 preliminary rates matched the final 2025 rates in every band for all four filing statuses, so the final 2026 rates are expected to match.5

If you get Social Security

Vermont exempts all your taxable Social Security at federal AGI of $55,000 or less, or $70,000 joint, and none of it from $65,000, or $80,000 joint. Between those amounts the exemption goes down in a straight line.1

The minimum tax on high incomes

If your federal adjusted gross income is above $150,000, you owe at least 3 percent of it. A win makes this minimum apply only by taking your federal AGI past $150,000 when your Vermont deductions and exemptions are large.11

Professional gamblers and the federal code

If you are a professional gambler, your wagering losses reduce your Schedule C income, which is inside federal adjusted gross income, so the federal 90 percent limit would flow into Vermont. Vermont follows the federal code to December 31, 2025 and does not decouple from IRC 165(d). No Vermont source states this outcome.

The online text of 32 V.S.A. 5824 still shows December 31, 2024. Act 164 of 2026 changed the date to December 31, 2025, and the change applies back to tax year 2025.

About this estimate

If you enter your Social Security, the calculator works out the exemption. If you do not, it warns you when a win moves your AGI through the band where Vermont’s Social Security exemption phases out.1

If a win makes Vermont’s 3 percent minimum tax apply, the calculator’s estimate is too low. If the minimum already applies to you before the win, the estimate is too high.11

The calculator takes off the Vermont standard deduction and personal exemptions, which Vermont takes off federal adjusted gross income before its rates. For 2025 each personal exemption was $5,300.4

No 2026 return form prints them yet. The calculator uses $13,250 single, $26,500 joint and $17,150 head of household, worked from the 2026 withholding guide. The head of household standard deduction could be $50 higher than it uses. It leaves out the exemption for each dependent and the amount at 65 or older or blind.

Sources

Every figure above traces to a primary source: a statute, an administrative code, a state agency page, or official form instructions.

1. 32 V.S.A. 5830e(a), the Social Security exclusion and its AGI band (checked 2026-09-26)
2. 2025 Schedule IN-112 instructions, the Retirement Income Exemption Worksheet (checked 2026-09-26)
3. 32 V.S.A. 5811, Vermont taxable income defined from federal adjusted gross income, less the standard deduction and personal exemptions, indexed each year (checked 2026-10-11)
4. Form IN-111 instructions (2025), rate schedules and the deduction lines (checked 2026-09-11)
5. 2026 Form IN-114 instructions (Rev. 10/25), "2026 Preliminary Vermont Tax Rates", Schedules X, Y-1, Y-2 and Z (checked 2026-10-03)
6. Withholding guide GB-1210-2026, the withholding allowance and the zero bands the 2026 standard deductions are worked from (checked 2026-10-11)
7. 32 V.S.A. 5823, Vermont income of a nonresident includes wagering proceeds (checked 2026-10-05)
8. 32 V.S.A. 5825, credit for income tax paid to another state (checked 2026-09-11)
9. VT Department of Taxes, 2026 tax legislation summary, Act 164 conformity (checked 2026-09-11)
10. VT Department of Liquor and Lottery, withholding on lottery prizes (checked 2026-09-16)
11. 32 V.S.A. 5822(a)(6), minimum tax of 3 percent of federal adjusted gross income above $150,000 (checked 2026-09-24)

The federal rule, for the parts of this page that rest on it

12. Public Law 119-21 section 70114(a), which rewrote 26 U.S.C. 165(d) on wagering losses from tax year 2026 and sets out its text (checked 2026-10-18)

We could not confirm these from an official source: whether any city or county tax applies.