Most states levy an income tax on their residents that is in addition to the federal income tax. Laws vary from state to state but in most states the state income tax is a tax on the annual earnings of individuals, corporations, trusts, limited liability companies, and other legal entities.

There are nine states that do not have a state income tax—including Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. But New Hampshire levies a tax on capital gains and Washington state recently enacted a tax on extraordinary profits from the sale of financial assets over $250,000.

In Vermont, like most states, residents are subject to state income tax in addition to federal income tax. Vermont's state income tax applies to the annual earnings of individuals, corporations, trusts, limited liability companies, and other legal entities. The state's tax structure is progressive, with rates increasing as income rises. Vermont's income tax rates for individuals range from a low of 3.35% to a high of 8.75%, depending on the level of taxable income. Corporations are also subject to a state income tax, with rates determined by the amount of taxable income. It's important for residents and entities in Vermont to be aware of their tax obligations and to file their state income tax returns annually by the prescribed deadlines. Unlike the states mentioned that do not have a state income tax, Vermont does not fall into this category and maintains its own set of rules and rates for taxing income at the state level.