For families considering a move to the Green Mountain State, Vermont’s generous child-focused tax credits offer significant financial relief—especially for households balancing the costs of child care and raising young children.
Up to 72% Back with Vermont’s Child and Dependent Care Credit
Eligible Vermont taxpayers can receive a refundable state credit worth 72% of the federal Child and Dependent Care Credit, offering much-needed support for those who work and pay for care. Whether you're a full-year or part-year resident, if you qualify for the federal credit, you automatically qualify for the Vermont version.
That means families who incur expenses for care of a dependent child under 13—or a spouse or dependent unable to care for themselves—can see a meaningful reduction in their state tax burden, or even receive a refund if the credit exceeds their state tax liability. Importantly, this credit is fully refundable, ensuring families get the full benefit regardless of how much state tax they owe.
$1,000 Per Child with Vermont’s Child Tax Credit
Vermont goes even further with its state-level Child Tax Credit, providing up to $1,000 per eligible child. This fully refundable credit applies to each child five years old or younger at the end of the tax year, helping offset the high cost of early childhood expenses.
Eligibility for this credit includes both full-year and part-year Vermont residents, with proration based on income earned while residing in the state. And Vermont is notably inclusive—taxpayers qualify regardless of whether they, their spouse, or their dependents have a Social Security Number or ITIN.
However, the credit phases out for higher-income families. Once a household's Adjusted Gross Income (AGI) exceeds $125,000, the credit is reduced by $20 for every additional $1,000 in income. It completely phases out at $175,000 AGI for both single and joint filers.
Why This Matters for Relocating Families
For families evaluating where to build their future, Vermont stands out as one of the few states with both a robust Child Tax Credit and a high-percentage Dependent Care Credit. These programs demonstrate the state’s commitment to supporting young families and working parents.
Whether you're a first-time parent, a dual-income household managing daycare costs, or a newcomer making Vermont your home, these tax credits can translate into real, year-over-year savings—putting money back into your pocket when it matters most.
Considering a Move? Here’s What You Need to Know:
- Eligibility is tied to federal qualifications—file your federal return first to determine your state benefits.
- Credits are refundable, meaning they can increase your state tax refund even if you owe nothing.
- Part-year residents qualify, making these programs attractive even for newcomers moving mid-year.
- No SSN or ITIN requirement for dependents, ensuring broad access across diverse family structures.
As Vermont continues to attract families drawn to its small-town charm, excellent schools, and quality of life, these financial benefits further strengthen the state’s appeal—especially for those in the early stages of raising a family.