For companies considering expanding in Vermont—or relocating operations to the Green Mountain State—the Vermont Employment Growth Incentive can provide performance-based cash payments tied to new jobs, payroll and investment.
Businesses evaluating Vermont as a place to expand may be eligible for one of the state’s primary economic development incentives: the Vermont Employment Growth Incentive, commonly known as VEGI.
Administered through the Vermont Economic Progress Council (VEPC), VEGI provides performance-based cash incentives to businesses that expand in Vermont or relocate operations to the state. Unlike a traditional tax credit, businesses that qualify receive direct cash payments after meeting approved economic performance requirements.
For business owners considering Vermont, that distinction is important: a company does not need to have enough Vermont income tax liability to offset the incentive. According to the Vermont Agency of Commerce and Community Development, VEGI payments are cash incentives rather than state tax credits, although payments are considered taxable income.
How Vermont’s VEGI Program Works
VEGI is designed to encourage economic activity that goes beyond the growth a company or its industry would ordinarily be expected to experience.
Under Vermont law, the program's purpose is to generate net new revenue for the state by encouraging businesses to add payroll, create jobs and make capital investments, with a portion of the resulting economic benefit returned to qualifying businesses.
That means simply hiring employees as part of a company's expected organic growth does not automatically qualify.
VEPC uses an economic cost-benefit model to estimate the additional state revenue expected from a proposed project and the costs associated with that activity. The model is part of determining whether a project can qualify and how much of an incentive may be authorized.
No Minimum Company Size or Job Requirement
One potentially significant feature for companies considering Vermont is the breadth of the program.
According to the state, there are no restrictions based on business size or type and no minimum number of jobs that a company must create simply to be considered for VEGI.
Instead, qualification depends on the proposed economic activity and whether it satisfies the program's requirements.
Among other criteria, applicants must demonstrate that the proposed project would not occur—or would occur in a significantly less desirable way—without the incentive. The project must also be expected to generate more tax revenue for Vermont than it costs the state. Businesses must comply with Vermont laws and regulations and satisfy additional program criteria.
What Jobs Qualify?
Not every newly created position can be counted toward a company's VEGI incentive.
According to ACCD, a new qualifying job generally must be a permanent, full-time Vermont position of at least 35 hours per week, held by a non-owner employee. It must meet the applicable VEGI wage threshold and requirements for employer-supported benefits. Part-time, seasonal, contract and agency positions do not qualify as new VEGI jobs.
For companies comparing locations, those requirements make VEGI particularly relevant to projects expected to create permanent, higher-paying employment rather than temporary or seasonal positions.
Cash Payments Are Earned Through Performance
VEGI is not an upfront grant simply awarded when a company announces an expansion.
Businesses establish performance targets during the approval process and must subsequently demonstrate that those requirements have been achieved.
According to the state, businesses generally must maintain their base payroll and employment, meet their new qualifying payroll requirement, and satisfy applicable employment or capital-investment performance requirements.
Once an incentive is earned, its value is divided into five annual cash installments, with continued payments dependent on maintaining the required performance levels.
That performance-based structure reduces the state's exposure when promised economic activity does not materialize. Vermont law also provides circumstances in which incentive payments can be reduced, recaptured or repaid.
Location Within Vermont Can Matter
Where a business establishes or expands operations can also affect its potential incentive.
Vermont law permits enhanced VEGI incentives for businesses located in qualifying labor market areas where unemployment is higher than the statewide average or average wages are lower than the statewide average. Enhanced incentives can also be available to qualifying environmental technology businesses.
That can make VEGI particularly relevant for companies considering locations outside Vermont's largest employment centers and for communities seeking additional private-sector investment.
Businesses should verify the current geographic eligibility rules with VEPC when considering a specific Vermont location because qualifying areas can change.
Businesses Should Apply Before Starting the Expansion
Timing may be one of the most important details for companies considering VEGI.
The program applies to prospective economic activity. Businesses cannot wait until they have already created the jobs or made the investments and then seek an incentive retroactively.
The state encourages businesses to begin with an online VEGI Pre-Application, which can be submitted before the company has made a final decision about its project.
VEPC generally provides an incentive estimate following the Pre-Application. Companies can then determine whether to continue through the Initial and Final Application process. Final Approval establishes the performance targets the company will be expected to meet.
For a company comparing Vermont with another state, that means VEGI should be investigated during the site-selection and expansion-planning process—not after the project is underway.
VEGI Has Also Faced Scrutiny Over How Growth Is Calculated
Businesses researching the program should also understand that VEGI's methodology has been the subject of public policy scrutiny.
In May 2026, Vermont's Office of the State Auditor reported on its examination of how "background growth" is incorporated into VEGI calculations. The review examined 21 awards and estimated that using company-specific historical growth rates instead of the industry growth rates used by VEPC would have reduced the incentives in that sample by approximately $8.4 million in aggregate. The Auditor's analysis said the results raised questions about whether industry growth rates can, in some cases, attribute growth to the incentive that a company might otherwise have experienced.
VEGI's existing methodology uses industry background growth rates based on historical data, and the state's cost-benefit model is subject to approval by the Vermont Legislature's Joint Fiscal Committee.
For prospective applicants, the debate does not change the fundamental requirement: qualifying growth must exceed the economic activity considered normal or "background" growth under the program's applicable methodology.
What VEGI Means for Businesses Considering Vermont
For entrepreneurs, executives and companies evaluating a move to Vermont, VEGI can become part of the financial analysis surrounding a relocation, facility expansion or significant hiring initiative.
The program is particularly worth investigating when a proposed project will:
- Create new permanent, full-time Vermont jobs;
- Generate payroll above applicable VEGI wage thresholds;
- Produce employment or investment beyond expected organic growth;
- Include significant capital investment in Vermont; and
- Depend, at least in part, on financial incentives when determining whether or how the project moves forward.
Because VEGI is performance-based, businesses should not treat an estimated incentive as guaranteed financing. Companies have to achieve and maintain their approved benchmarks before receiving the corresponding payments.
The most important takeaway for businesses considering Vermont may therefore be when to start the conversation. A company contemplating an expansion or relocation should explore VEGI before committing to or commencing the new economic activity.
The Vermont Economic Progress Council recommends beginning with its online Pre-Application process, which allows businesses to obtain an estimate of a potential incentive before proceeding with a formal application.
For companies comparing Vermont with other locations, understanding VEGI early in the decision-making process can provide a clearer picture of the state's potential financial support for creating jobs and making long-term investments in the Green Mountain State.