Vermont Property Tax Rate by Town: What Investment Properties Actually Pay

Vermont's property tax system is more complicated than a single rate search will reveal. The number you need for investment underwriting is not the same number that appears in a residential buyer's closing estimate — because investment properties pay at the non-homestead rate, and Vermont homestead tax relief (which can be substantial) is completely unavailable to any property owned by an LLC, rented as a long-term or short-term rental, or used as a second home.

Here is how the system works, why the rates vary by town, and what investors actually pay.

Two Components: Municipal + Education Tax

Vermont's annual property tax bill is the sum of two distinct assessments applied to the property's assessed value:

1. Municipal Property Tax Set by each town to fund local government services — roads, fire, police, library, general town operations. The rate varies widely by municipality and is voted on annually as part of the town budget process. Municipal rates across Vermont typically range from roughly 0.4% to 1.0% of assessed value (0.40 to 1.00 per $100 of assessed value), with urban centers like Burlington on the higher end and smaller rural towns varying considerably based on service levels and tax base.

2. Statewide Education Property Tax Vermont funds its K-12 public education system primarily through a statewide property tax rather than relying on local town budgets. The education tax rate is set annually by the state legislature based on each local school district's approved budget.

The education tax has two distinct rates:

• Homestead rate: Applied to primary residences where the owner has filed a Vermont Homestead Declaration (Form HS-122). This rate is lower and can be further reduced for qualifying Vermont residents through the state's income sensitivity (IS) adjustment, which caps education tax as a percentage of household income.
• Non-homestead rate: Applied to all properties that do not qualify as a Vermont primary residence — including investment properties, second homes, LLC-owned properties, long-term rentals, and short-term rentals.

For a typical Vermont tax year, the combined non-homestead property tax rate (municipal + education) for investment properties commonly falls in the range of 1.5% to 2.5% of assessed value depending on the town, with some higher-service communities and resort towns on the upper end.

Why Investment Properties Cannot Use Homestead Benefits

Vermont's Homestead Declaration allows resident homeowners who occupy their property as their primary Vermont domicile to access the lower homestead education tax rate and income sensitivity adjustments. These can reduce the annual tax bill significantly — in some cases by hundreds or thousands of dollars per year.

Investment properties are permanently excluded from this benefit. Specifically:

• Any property owned by an LLC, corporation, or partnership is ineligible for the Homestead Declaration regardless of whether any member of the entity lives there
• Any property rented out as a long-term or short-term rental is not eligible even if individually owned
• Any property used as a second home or vacation property is not eligible

This exclusion is not a penalty — it is the baseline treatment for investment property. But it means that published effective tax rates in Vermont, which are often quoted blended with homestead properties, understate what investment property owners actually pay.

How to Find the Actual Rate for a Specific Town

Vermont publishes the grand list data and tax rates through the Department of Taxes, and each town sets its rates through the annual budget process. The state's Property Valuation and Review (PVR) division publishes town-by-town tax rate data each year.

The calculation uses two adjustment factors:

• Common Level of Appraisal (CLA): Adjusts for towns where assessed values are not at 100% of market value (many Vermont towns have not done full reassessments recently)
• Coefficient of Dispersion (COD): Measures assessment uniformity within the town

These adjustments mean the effective tax rate may differ from the nominal rate. A town with a 1.8% nominal rate but a CLA of 90% is effectively charging a higher rate relative to market value than the nominal figure suggests.

For specific current rates:

• Vermont Department of Taxes: tax.vermont.gov (PVR Division, annual rate reports)
• Town clerk offices can provide the specific grand list rate for the current tax year
• Your closing attorney will calculate the exact prorated property tax due at closing for a specific property

A Representative Range by Market Type

While rates change annually, these ranges give investors a baseline for underwriting:

Burlington and Chittenden County: Combined rates for non-homestead properties typically land in the 1.8%–2.2% range. High education spending relative to the tax base drives the education portion up.

Ski resort towns (Stowe, Killington area): Property values are very high, which means the absolute dollar tax bill is large even at comparable rates. Combined non-homestead rates often run 1.6%–2.0%, but on a $700,000 property that means $11,200–$14,000 annually.

Rural towns (Northeast Kingdom, rural Rutland/Windsor County): Municipal rates may be lower due to minimal town services, but the education tax is set statewide. Combined rates often run 1.4%–1.9%, but very low absolute values mean the dollar bill is manageable even at higher percentage rates.

Montpelier and Barre: Post-flood recovery and housing supply constraints have affected values and assessments. Combined rates are comparable to Burlington in percentage terms, but buyers should verify flood zone classification before modeling tax burden on specific parcels.

The Grand List and Assessment Frequency

Vermont property assessments are made by local town listers and recorded in the "grand list." Unlike states that reassess annually at market value, Vermont towns often have significant gaps between full reassessments. A property bought for $500,000 may sit on the grand list at a $300,000 assessed value if the last town-wide reappraisal was a decade ago.

The CLA adjustment is meant to normalize this, but investors should request the specific assessed value from the town lister directly for any property under consideration, not rely on the purchase price as the assessment basis.

Modeling Property Tax in Vermont Acquisitions

For a reliable investment property underwriting model, use the following inputs:

1. Get the current assessed value from the town lister's card
2. Apply the current combined non-homestead rate (municipal + education)
3. Add 10%–20% buffer for annual rate increases driven by school budget growth

Vermont school district budgets have grown at a rate that has driven education tax rates upward in many towns over recent years, and that trend is not expected to reverse soon. A static property tax figure in a 10-year hold model will underestimate the cumulative tax burden.

For complete acquisition cost worksheets — including property transfer tax, non-homestead tax rate modeling, and income tax calculations — the Vermont Investment Property Guide is built specifically for this state's tax structure.

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