October 28, 2026 | By Bill ShouldiceWith election season here, taxes are all over the news and social media, and sometimes it’s hard to know what’s accurate.
Recently, I’ve gotten into work in the morning all fired up about something I saw online – so I ask the experts on my staff at the Department of Taxes what they make of it. Most of the time, their answer is a polite version of, “That’s total garbage, Bill, and you really need to stop looking at Facebook so much.”
But when a claim shows up often enough, in enough places, it starts to feel true. That’s exactly when it’s worth slowing down and fact-checking.
Since Congress passed the One Big Beautiful Bill Act, or OBBBA, in 2025, I’ve seen lots of posts about how Vermonters could be impacted by their federal taxes. One hot take that keeps coming up is the idea that OBBBA gives the top 1% of Vermonters an average tax cut of $57,000.
This federal tax cut figure is usually paired with a call to make Vermont’s wealthiest pay more state income taxes toward funding new initiatives. After all, they just saw a massive federal tax cut, right? Well, as my staff and the Legislature’s nonpartisan fiscal staff explained this past session, that’s not what actually happened.
High-income taxpayers did see a federal tax cut from the first Trump Administration’s Tax Cuts and Jobs Act, back in 2017. During the 2018 legislative session that followed, Vermont legislators responded – raising state income taxes on those top earners to “recoup” or “claw back” some of those federal tax cuts. What the OBBBA did last year was extend those existing tax cuts rather than let them expire. That popular $57,000 figure actually relates to the average tax increase high earners would have seen if the 2017 Trump tax cuts had expired.
Getting specific: Vermont’s highest earners don’t suddenly have $57,000 in their bank accounts that they didn’t before the OBBBA. And if we want to fund a new initiative here in Vermont, the truth is that it will require a new tax increase on Vermonters.
How much to tax high earners is a debate worth having, but the facts are important. For one, wealth and income aren’t the same thing, and a surcharge on the highest-income filers will not necessarily hit “the wealthy.” In Vermont, our tax data consistently shows that high income tends to be a one-time event – like selling a business or farm.
In fact, of all the Vermonters who earned enough to make it to the top 1% in the past decade (reporting income of roughly $500,000 or more), almost half reached that income level only once over the 10-year period. Only about 700 filers hit that mark every year.
For many Vermonters, selling their farm or business is their retirement plan. So when advocates call to tax “the wealthy,” they are really proposing that the state take an even larger bite out of the money older Vermonters are counting on to support them for years to come.
Whether we’re talking about “one-time events” or one of the 700 consistently high-income individuals, these Vermonters are already paying some of the highest income taxes in the country. Some people point to the 4% surcharge on income over a million dollars that Massachusetts enacted in 2023 and claim that Vermont should try something similar.
Well, you might be surprised to learn that a Vermonter making a million dollars in 2026 is already paying about $30,000 more in state income taxes than they would in Massachusetts, even with their new “millionaire tax.” In fact, they already pay more than they would in all but four other states in the country. Even at $10 million in income, that person is still paying more in Vermont than they would in Massachusetts.
In a given year, Vermonters with income over $500,000 currently pay about a third of all the income taxes the state receives. The top 10% pays about 65%. The bottom 50% of filers contribute a little less than 3%. Overall, Vermont has one of the most progressive state tax systems in the country. We also are one of just 12 states in the country with an estate tax, which is the only type of tax that truly applies to accumulated wealth.
I get it – taxes are confusing, and who really wants to go deep on tax policy? No doubt it’s a lot easier to take a headline or a social media post and run with it – I have certainly been guilty of that!
But to have productive conversations on improving our tax system or paying for new initiatives, we need to separate the facts from the spin. Vermont voters and taxpayers deserve that from us.
Bill Shouldice IV is Commissioner of the Vermont Department of Taxes. He previously served as Secretary of the Agency of Commerce and Community Development under Gov. Howard Dean. He and his wife live in Stowe.
Source: Vermont Department of Taxes, personal income data for tax year 2024, see AGI Percentile table.
Data and methodology: Vermont Department of Taxes data for tax year 2024 indicate that adjusted gross income (AGI) of approximately $500,000 corresponds to the threshold for the top 1% of Vermont resident income tax filers. The income thresholds are used to identify the groups referenced in the op-ed. The shares of income tax paid by the top 1%, top 10%, and bottom 50% are calculated by comparing the total income tax attributable to each group with total Vermont resident income tax collections represented in the data. Note that Tax Year 2024 is the most recent tax year for which complete data is available.