Vermont Estate Tax 2026: $5M Filing Threshold, 16%, Form EST-191

What the statute says, and what changed on June 18, 2026

Vermont's estate tax is short. Four sections do the work, and the filing section is the one that moved.

Section 7442a sets the rate. The table reads “Under $5,000,000.00” with a rate of “None”, and “$5,000,000.00 or more” at “16 percent of the excess over $5,000,000.00”. The tax so computed is multiplied by a fraction not greater than one whose numerator is the Vermont gross estate plus Vermont-situs gifts and whose denominator is the federal gross estate plus gifts, and subsection (c) says all values are as finally determined for federal estate tax purposes. There is no indexing in the section.

Section 7402 builds the base. The Vermont taxable estate is the federal taxable estate under section 2051 of the Internal Revenue Code, “without regard to whether the estate is subject to the federal estate tax”, increased by the state death tax deduction, the foreign death tax deduction and the taxable gifts made within two years of death. Subdivision (8) ties Vermont to the Internal Revenue Code as amended through December 31, 2025; Act 164 section 61 moved that date forward a year, from December 31, 2024.

Section 7444 says who files. An executor submits a Vermont return when the decedent has an interest in property with a Vermont situs and one or both of two things apply: a federal estate tax return is required under section 6018, or the sum of the federal gross estate and federal adjusted taxable gifts made within two years of death exceeds a dollar figure. Until June 18, 2026 the figure in the statute was $2,750,000.00. We took the earlier text from the Internet Archive's copy of the section and the new text from the Vermont Statutes Online, which ends with the note “2025, No. 164 (Adj. Sess.), § 16, eff. June 18, 2026.”

The Department of Taxes page puts it this way: “In 2026, the Vermont Legislature increased the Estate Tax filing threshold to $5 million to match the Estate Tax payment threshold.” Its 2026 legislative highlights list the change as Act 164 (H.933), section 16, effective June 18, 2026. Act 164 section 64 makes the whole act effective on passage except for a list of sections, and section 16 is not on that list; the Governor signed the bill on June 18, 2026.

What this means for the premise you will read elsewhere. Several summaries describe a “$5 million” Vermont estate tax threshold as new in 2026. The $5,000,000 in the rate table is not new: the Department's own table runs $2,750,000 for 2016 to 2019, $4,250,000 for 2020 and $5,000,000 for 2021 or after. What is new is the statute's filing figure, which had been lagging the forms. Whether the amended 7444 reaches deaths before June 18, 2026 is not stated in the act; it has no application clause for section 16, and estates between $2,750,000 and $5,000,000 owe no tax either way.

What a Vermont estate owes at $5M to $20M

Assumptions, all our arithmetic: a Vermont resident, every asset in Vermont, no taxable gifts in the last two years, no farm reduction, and an estate figure that is the Vermont taxable estate (the federal tentative taxable estate on Form 706 line 3a after debts, expenses and the marital and charitable deductions, which is line 1 of Form EST-191).

Two readings. First, the tax is 16% of the excess, so $5,000,001 owes 16 cents, not 16% of the estate; the Department's page says the tax is assessed only on the value above $5 million. Second, the rate is flat, so the only planning variable inside Vermont is the base: what counts, when a gift was made and where the property sits. The sibling table in our states list gives the same $160,000 at $6 million and sets it beside the other twelve jurisdictions.

Nonresidents: the Vermont ski house and the rental

A nonresident decedent owes Vermont tax on Vermont-situs property. The method is on the face of the form. Lines 1 to 7 compute the tax on the whole taxable estate as if it were a Vermont estate, lines 8 to 14 compute the share of the estate that is in Vermont to four decimal places, and line 15 multiplies the two. The Department states the situs rule for its form this way: Vermont gross estate is “the gross value of each item of the decedent's real and tangible personal property located in Vermont”, and for a resident the Department adds that “include all intangible personal property.” Section 7402(15)(D) puts the situs of intangible property in “the state or country in which the decedent was domiciled at death”, and the Department names “bank accounts, stocks, bonds, and mortgages” as intangibles taxable by the state of residence.

Note that the exclusion is shared, not lost: the $5,000,000 is subtracted from the whole estate first and the tax is then prorated, so a nonresident with a $12,000,000 estate and a small Vermont share still benefits from the whole $5,000,000.

The entity question, honestly stated. Minnesota's statute tells nonresidents in so many words that real property held through a pass-through entity is treated as if the entity did not exist, and our Minnesota page reports that rule. The Vermont sections we saved (7402, 7442a, 7443 to 7448) contain no such rule; they define situs by type of property, and an LLC interest is, on its face, an intangible. Whether the Department of Taxes would look through an LLC that holds Vermont real estate is not in any document we downloaded, and the Department's page says only: “For nonresident decedents, intangible property is also excluded.” Treat the $0 row as a reading of the text, not a ruling, and ask the Department or a Vermont attorney before depending on it. The same structure can give the opposite answer in the next state: see our Washington and New York pages.

The filing test is separate from the tax. A nonresident with a $4,900,000 estate and a Vermont house owes nothing and, below the $15,000,000 federal line, has no return under 7444. A nonresident with $5,200,000 and the same house must file Form EST-191 with a pro forma federal Form 706, even though the tax on $200,000 above the line, shared by the Vermont fraction, is small. The Form EST-191 instructions require a pro forma Form 706, with all related exhibits and appraisals, when no return is due at the federal level, so the cost of an appraisal of the house is the real expense in that band.

The two-year gift add-back

Vermont has no gift tax in the sections we read. Its reach at death is the add-back: taxable gifts under section 2503 “made by the decedent within two years of the date of death” are added to the Vermont taxable estate at their value under section 2512, excluding any value already in the federal gross estate. Annual-exclusion gifts are not taxable gifts (see our annual gift tax exclusion guide). A donor who files Form 709 for a large gift should know the add-back exists; our Form 709 guide for illiquid real estate interests covers the federal side.

The last row shows that a nonresident cannot move Vermont real estate out of reach by giving it away shortly before death: the gift's situs is determined when the gift was made, and Vermont real property stays Vermont property. For intangible gifts, 7402(15)(D) uses the state where the donor was domiciled when the gift was executed. What the gift does to the recipient's basis, which is the other cost of dying within the window, is in our step-up in basis guide.

Couples, the federal layer and the farm reduction

No portability, no Vermont-only credit that we found. The $5,000,000 is a feature of the rate table. We found nothing in the sections we saved that carries an unused amount from the first spouse to the second, and the Form EST-191 has a single exclusion line. In our no-growth example a couple with $10,000,000 who leave everything to the survivor face $800,000 at the second death; a bypass trust that uses the first spouse's $5,000,000 at the first death leaves a $5,000,000 estate and $0 at the second (our arithmetic, with trust drafting for an attorney). Between $5,000,000 and $15,000,000, where no federal tax applies, that is the whole of the saving.

The federal layer. The federal basic exclusion amount is $15,000,000 for 2026 deaths (Rev. Proc. 2025-32, implementing section 70106 of Public Law 119-21). Above $15,000,000 a federal Form 706 is due, and the federal return deducts state death taxes under section 2058 while Vermont adds that deduction back (7402(14)(A)), so the two do not form a loop. Our federal estate tax guide has the full table.

The farm reduction. Section 7443 reduces the tax for an estate that qualifies for installment payment under 26 U.S.C. 6166 and whose closely held business is farming in Vermont, by the percentage the farm business bears to the federal adjusted gross estate. Form EST-191 line 16 carries that percentage from Schedule EST-192. A rental portfolio or fund shares do not qualify.

Return, deadlines and clearance

Timeline for a death on October 22, 2026 (our arithmetic): return and payment due July 22, 2027; with Form EST-195 filed by that date, the return is due January 22, 2028, but the tax estimated to be due must still be paid with the extension request by July 22, 2027. Form EST-195 says the interest rate is set annually by the Commissioner of Taxes under 32 V.S.A. 3108 and that returns filed late without an authorized extension are subject to a late filing fee; we did not save the current rate, so check it on the date you pay.

Dates to watch

• The 2026 forms. The Form EST-191 and E-2A instructions on the Department's page are marked Rev. 10/25 and still describe the old test in words (“required to be filed under section 6018” and “exceeds $5,000,000”); a revision for deaths after June 18, 2026 may follow. Check the Department's forms page before filing.
• Whether 7444 reaches earlier deaths. The act has no application clause for section 16. For a death before June 18, 2026 with an estate under $5,000,000 the tax is zero in any case; ask the Department if a clearance is stuck.
• The 2027 session. The Legislature changed this chapter in 2026 only for the filing figure and the Code link-up date; nothing in the sections we read is indexed, so $5,000,000 stays unless a new act changes it.
• The nine-month date runs from each death: July 22, 2027 for a death on October 22, 2026.

What a reader can do with this

What the documents let you check before talking to anyone:

• Find the two numbers. Gross estate (everything owned, including a revocable trust, retirement accounts, rental real estate and fund shares) plus taxable gifts of the last two years answers the filing question; the taxable estate after debts, expenses and the marital and charitable deductions answers the tax question.
• Sort the property by type and place. Vermont real estate and tangible property are Vermont property for everyone; accounts, stocks and mortgages follow the owner's state; an LLC or fund interest is a question to put to a Vermont attorney.
• List gifts of the last two years above the annual exclusion. They come back at gift-date value, so a deathbed gift of Vermont real estate saves nothing.
• Plan for appraisals. An estate just above $5,000,000 with a Vermont building must file with a pro forma Form 706 and appraisals even if the tax is small.
• Plan the cash. Tax and return fall due nine months after death and a filing extension does not extend payment.

The decision, and who makes it. An estate-planning attorney drafts the documents, including any bypass trust or entity structure for Vermont property, and a CPA prepares Form EST-191 and the pro forma Form 706. A financial adviser's part is how the tax and the appraisals would be paid from assets that are mostly real estate and illiquid funds. This page is not a recommendation to change a plan.

This is analysis of public documents, not investment, legal or tax advice.

FAQ

Sources, read and saved on October 22, 2026: 32 V.S.A. 7402, 7442a, 7443, 7444, 7445, 7446, 7447 and 7448 (legislature.vermont.gov), with the Internet Archive's copy of section 7444 as it read before Act 164; 2025 Acts and Resolves No. 164 (H.933), sections 16, 60, 61 and 64 (legislature.vermont.gov); the Vermont Department of Taxes pages on estate tax and on 2026 legislative highlights; Vermont Form EST-191 and its instructions, Form EST-195 and the Form E-2A instructions (all Rev. 10/25); and Rev. Proc. 2025-32 (irs.gov). The grid and the examples are our arithmetic, with the assumptions stated.