Vermont Estate Taxes

Vermont's estate tax is designed to absorb the federal estate tax credit for state death taxes. However, effective for decedents dying on or after January 2, 2002, the state death tax credit is based on federal estate tax laws in effect on January 1, 2001. This means that the phase-out of the state death tax credit under the federal Economic Growth and Tax Relief Reconciliation Act of 2001 does not apply to Vermont's estate tax.

No additional estate tax is imposed.

Deductions. Vermont essentially allows the same deductions from an estate as the federal estate tax deductions. For resident decedents, the Vermont gross estate is the federal gross estate, excluding real or tangible personal property located outside Vermont. For nonresident decedents, the Vermont gross estate is the same except that all intangible personal property is also excluded.

Returns. The Vermont estate tax return is generally due within nine months of the decedent's death unless an extension is granted. Any Vermont estate taxes owed must be paid within the filing period for the return.

Generation-skipping transfer tax. Vermont imposes a generation-skipping transfer tax equal to the federal credit as explained above. However, the Vermont tax is decoupled from the scheduled termination of the generation-skipping transfer tax credit after December 31, 2004.