When it comes to Vermont’s franchise tax, the reality is more nuanced than in states like Texas or Delaware. Vermont does not impose a traditional franchise tax on all businesses. Instead, the state incorporates the concept into its corporate income tax structure, with a mandatory minimum tax that functions much like a classic franchise tax for most corporations.
The term franchise tax appears in state law only for a narrow group: digital business entities. For the vast majority of businesses, Vermont’s recurring tax obligation is the corporate income tax, which includes a minimum tax floor based on Vermont gross receipts.
If you run any kind of corporation in Vermont, or even outside the state but selling into it, you almost certainly need to file a Vermont corporate income tax return. Their minimum tax works as their version of a traditional franchise tax, applying whether you turn a profit or not.
This tax applies to:
For LLCs, tax treatment follows your federal election. Taxed as a corporation? You're in the C-corporation bucket. Elect partnership treatment? You'll file an informational BI-471 instead.
Financial institutions get carved out of corporate income tax entirely. They pay a separate bank franchise tax with its own return and rate schedule.
Every corporation files a return and pays at least the minimum, even when showing a loss.
Your entity type determines your form:
Every return needs a complete copy of your federal return since Vermont builds on federal taxable income. Multistate businesses must attach the sales-factor apportionment schedule showing their Vermont income share.
File through the myVTax portal for the smoothest experience. It automatically attaches payments, confirms receipt instantly, and eliminates mail delays.
The state tracks the federal schedule, making most dates familiar if you already manage federal filings:
These dates mirror the IRS schedule, so you can close your books for both federal and Vermont simultaneously. The Department of Taxes calls these the "original" due dates. Penalties and interest start accruing the day after if you haven't paid your tax.
Vermont's corporate income tax starts with your federal taxable income, adds Vermont-specific adjustments, and then runs two tests: graduated tax brackets and the mandatory minimum tax.
For tax years beginning January 1, 2023 or later, Vermont uses three brackets:
Picture a C corporation with $180,000 of Vermont-apportioned income. You owe $600 on the first $10,000, $1,050 on the next $15,000, and $13,175 on the remaining $155,000—totaling $14,825.
This calculation works whether you file standalone or as part of a combined group. But even if your calculated liability is tiny or negative, certain specialized corporations in Vermont (like captive insurance companies) still face a minimum tax, though for most corporations, the tax is based on net income rather than gross receipts.
Vermont gives you three ways to file your corporate return, each starting with the same core forms:
The fastest route is the state's myVTax portal. You can upload returns, attachments, and payments in one session, and the system instantly time-stamps your submission.
Step-by-step online workflow:
Prefer hard copies? You can print the same forms and mail them to the Vermont Department of Taxes. The envelope must be postmarked by the original due date: March 16 for S corporations and partnerships, and April 15 for C corporations. The exact mailing address appears on each form's instructions, so check before sealing the packet.
Miss a Vermont corporate return, and the meter starts running almost immediately. The Department of Taxes imposes a flat 5% penalty if the return is filed within 15 days after the due date, or a 25% penalty if filed later, regardless of whether your business lost money that year.
Beyond the financial hit, you risk losing good-standing status with the Secretary of State. This blocks financing, contract bids, and your ability to expand into new markets.
Persistent non-compliance escalates quickly. Vermont can dissolve your corporation or revoke your authority to do business in the state. Once that happens, your ability to operate and enter into new contracts is significantly impaired, and any new business becomes technically unauthorized.
In extreme cases, Vermont can escalate to liens, levies, or criminal charges for tax evasion. The state doesn't jump straight to penalties, though. You'll get a sequence of courtesy letters, balance-due notices, and final demands before the assessment becomes fixed.
Not every business that touches Vermont ends up paying its corporate income tax. Several carve-outs either remove the obligation entirely or shift you to a different tax regime, making it essential to verify your status before filing.
Tax-exempt entities:
Alternative tax regimes:
Most exemptions are automatic, but you carry the burden of proof. Keep formation documents, IRS exemption letters, and apportionment schedules ready, and disclose relevant facts on Form CO-411 or BI-471.
Your Vermont corporate return isn't the only item on the compliance checklist. The state layers several other taxes on top of the corporate income and minimum tax regime, and ignoring them can undo even the most careful planning. This includes:
Vermont automatically grants you a seven-month filing extension when you obtain a federal extension. Nothing extra to submit to the state, but the clock starts ticking as soon as the IRS accepts your request. If you only need a Vermont extension, submit Form BA-403 through myVTax or by mail no later than the original due date.
However, the extension covers filing only. Any corporate tax (including the minimum tax) is still due on April 15 for C corporations or March 15 for S corporations and partnerships. Pay late and Vermont begins tacking on interest and late-payment penalties, typically assessed as a flat monthly fee for late filing, along with interest on unpaid tax balances according to state statutes. These costs can accumulate quickly if taxes remain unpaid.
Caught an error after filing? File an amended return through myVTax or by mailing a corrected Form CO-411 or BI-471, clearly marking it "Amended." Vermont's statute of limitations generally gives you three years from the original due date (or the date you filed, if later) to correct mistakes or claim a refund.
Vermont's corporate income tax calculations require professional expertise, especially when integrating federal taxable income with Vermont-specific adjustments, managing graduated bracket calculations versus minimum tax requirements, and coordinating different filing deadlines.
While Discern can't help you with these complex tax filings, we focus on what we do best:
Ready to simplify your Vermont compliance? Book a demo with Discern today.
.png)
.png){kind=small}