Vermont Economy Overview

Currency

US Dollar (USD)

Working hours

40 hours/week

Public/bank holidays

10 public holidays

Capital

Montpelier

Languages

English

Population

Approx. 640,000

Minimum hourly salary

$14 (USD)

Tax year

1st Jan – 31st Dec

Date format

MM/DD/YYYY

Misclassification penalties

Employers found guilty of misclassification may be required to pay back wages, unpaid taxes, and insurance contributions, in addition to civil penalties ranging from $100 to $5,000 per infraction.

Fun fact

The iconic ice cream brand Ben & Jerry’s started in a renovated gas station in Burlington, Vermont in 1978. The company even has a “Flavor Graveyard” where discontinued flavors are commemorated with witty headstones.

Vermont is known for its old town charm and breathtaking landscapes, which is the reason it is called the Green Mountain State. In addition to its beauty, the Northeastern state has become an investment hub, particularly in the tourism, manufacturing, and real estate sectors. 

The strong and diverse economy has attracted international investment from France, Canada, and the UK. Along with economic growth, Vermont has a well-developed education system and offers lower housing costs compared to the national average. 

For business expansion in Vermont, you won’t be disappointed by the local skilled workforce described as having a strong work ethic. While hiring employees with the necessary experience and qualifications is important, employers are encouraged to familiarize themselves with Vermont employment laws for compliance and employee satisfaction. 

When doing business in Vermont, you have the option of incorporation, or you can hire the services of an Employer of Record (EOR) or have a professional recruitment agency hire a workforce for your company. Discover why you should expand in Vermont and how to establish a compliant business presence. 

Overview of Vermont's Economy

Vermont’s GDP has shown steady economic growth since the year 2000 with its real GDP reaching $35.07 billion in 2023. Vermont has a strong economic outlook with revenue from key industries such as manufacturing and services expected to increase over the next few years. 

Sector Contribution to Vermont’s Economy
GDP and Economic Overview Vermont’s GDP is approximately $45 billion, supported by small businesses, public services, and sustainable industries. Economic growth is modest but steady.
Agriculture and Specialty Food Dairy, maple syrup, and organic farming are major contributors. Vermont leads the US in maple syrup production and maintains a strong farm-to-table economy.
Health Care and Social Assistance The state’s largest employment sector, driven by regional hospitals and an aging population with consistent demand for services.
Tourism and Outdoor Recreation Seasonal tourism linked to skiing, fall foliage, and outdoor activities supports rural economies and hospitality employment.
Advanced Manufacturing and Technology Home to precision manufacturing and aerospace firms, with a small but growing technology and innovation scene centered around Burlington.
Education and Government Services Public institutions, including the University of Vermont, are major employers and contribute to economic stability and local spending.
Renewable Energy and Environmental Innovation More than half of Vermont’s electricity is generated from renewable sources, supporting green jobs and environmental leadership.

The state’s financial stability is owed to the expansion of its economic drivers, with the tourism sector alone valued at $4 billion in 2023. The finance and real estate sector is the largest, contributing $6.58 billion to GDP, while business services accounted for $5 billion in 2023. 

Vermont has maintained relatively low unemployment rates at 2.6% and that state aims to increase its foreign investment and small business growth through government-based incentives. 

Taxes

Employer Tax: 8 – 9%

Social Security (FICA)

6.2% 

Medical Insurance (FICA)

1.45% 

Federal Unemployment Tax (FUTA)

6.00% (first $7,000)

State Unemployment Insurance (SUI)

~0.4% – 8.4%

Employer Tax: 7.65%

Social Security (FICA)

6.2%

Medical Insurance (FICA)

1.45%

Income Tax

Vermont has a progressive state income tax system. The tax applies to both residents and non-residents with Vermont-based income. Higher earners may also face a surcharge, bringing the effective top rate just over 9%. 

Gross Income

Up to $47,900

$47,900 – $116,000

$116,000 – $242,000

More than $242,000

Tax Rate

3.35%

6.60%

7.60%

8.75%

Business Regulation in Vermont

When doing business in Vermont, you must adhere to the state laws. This includes understanding and following regulations concerning business registration, paying taxes, and pursuing investment programs for expansion. 

Business Registration Procedures

If you are ready to incorporate a business in Vermont, regardless of the structure or size of the company, you must register with the Vermont Secretary of State. Depending on your type of entity and operations, you may have to register with the Vermont Department of Taxes. Certain businesses may require permits or licenses to operate in the state. While it isn’t difficult to start a business in Vermont, it is always best to seek legal advice to ensure that you follow the correct procedures and avoid costly mistakes. 

Tax Policies

Vermont has a progressive tax system, which means that corporate income taxes range between 6% and 8.5%. Companies pay state sales tax of 6% and a combination of state and local sales tax at 6.35%. 

All businesses that operate in Vermont are required to file tax returns yearly. Partnerships, limited liability companies (LLCs), and S corporations are all subject to business income tax.

Investment Incentives

Vermont offers a combination of tax credits and business grants to encourage investment and business growth. Several programs are available, including: 

  • Vermont Employment Growth Incentive (VEGI): Businesses that create full-time employment in Vermont, in addition to the investment of capital, are provided cash grants.
  • State Trade Expansion Program: Qualifying Vermont companies receive funding to encourage expansion into international markets.
  • Downtown and Village Center Tax Credits: Tax deductions are awarded for private investment into historic restoration and support of technological advancements. 

Each program focuses on rewarding businesses that invest in the economic growth of Vermont by creating employment, supporting the development of infrastructure, and providing opportunities for small business expansion.

What Are the Benefits of Doing Business in Vermont?

Vermont is financially stable with a diversified economy, and because of favorable incentives and conditions for businesses, it makes sense to expand in the Northeastern state. A closer look at the benefits of doing business in Vermont can help you make an informed decision:

  • Business incentives: Vermont aims to improve foreign direct investment by offering international businesses incentives to establish their operations in the state. Tax credits are provided to eligible companies while grants are offered to businesses that invest in the state with the hopes of expanding to foreign markets.

    International business owners looking to maximize their returns can take advantage of Vermont’s incentives, from energy rebates and community development to low-interest loans for eligible companies.
  • International trade: Vermont benefits from ongoing international trade with major trade partners including France and Canada. This is attributed to a high volume of exports, such as electronics, food, and machinery, supporting job creation and access to foreign markets.
  • Low housing costs: When compared to the national average, the housing costs in Vermont are significantly lower. The median cost of a home in Vermont is approximately $414,000, which is 11% less than the prices for residential real-estate across the country.

    Low housing costs in the state increase consumer spending and help attract and retain local talent, as workers can afford to rent or own their homes.

What Are the Downsides of Doing Business in Vermont?

While Vermont offers many professional opportunities, awareness of the potential limitations can help businesses overcome possible challenges. 

  • High business operational costs: Entrepreneurs and small to medium businesses may be impacted by high operational costs in the state. On a positive note, the lower housing prices may help employees and investors save on the costs of utilities and business-related expenses. 
  • High tax rates: Vermont does not have a flat tax rate, which means that businesses are subject to escalating tax based on their earnings. 

International Expansion into Vermont

Vermont Employer of Record (EOR)

An EOR in Vermont helps you expand your business and workforce without establishing a legal entity in the state. An EOR serves as the legal employer of your labor force, which means they will maintain compliance concerning taxes, benefits administration, payroll, and drafting employment contracts. 

Recruitment Agency

If you need assistance finding and placing a workforce, a Vermont recruitment agency can make all the difference. Professional recruiters will connect you to a large talent pool of job candidates and match the skills of qualified individuals to the job requirements. The recruitment agency will perform background checks, interviews, and onboarding of employees. They can help you find the best employees without the time and cost it would take to hire staff traditionally. 

Vermont Professional Employer Organization (PEO)

A PEO in Vermont serves as the co-employer of a business where services such as payroll and benefits administration are outsourced. The PEO is known as an HR service provider and assists all-sized businesses with recruitment and compliance. You can hire a PEO to handle your remote workforce, but company owners remain responsible for adhering to Vermont’s labor laws. 

Subsidiary Incorporation

To incorporate a subsidiary in Vermont, consider the following process: 

  • The first step is to choose a business entity or structure, such as an S corporation or an LLC. 
  • You must file Articles of Incorporation with the Vermont Secretary of State. 
  • Filing fees are approximately $125. 
  • In addition to filing the requested documents, a registered agent who lives in Vermont must be appointed. 
  • Depending on your company operations, you must register for tax with the Vermont Department of Taxes. 
  • If you have a business in the food and beverage industry, agriculture, or construction field, you must obtain an operating license. 

Branch Registration

Opening a branch offers a flexible market entry solution for many businesses. In Vermont, you must register with the Secretary of State even if you are opening a branch office. The relevant state form must be completed for each branch opened. Documents that are requested for branch registration include Articles of Incorporation and tax certification. 

Staffing Agency

A staffing agency will help you find employees for temporary and permanent employment contracts. They are experienced in finding staff for specialized industries, and contract work should businesses be interested in flexible workforce solutions. 

Business Opportunities in Vermont

Vermont may not be a major commercial hub, but its economy is shaped by values-driven markets, natural beauty, and strong local demand. Small businesses thrive here when they tap into the state’s core strengths—sustainability, agriculture, outdoor lifestyle, and artisanal quality.

Business Opportunity Reason for Business Opportunity
Organic Farming and Local Food Products Vermont has strong consumer demand for organic, locally sourced, and sustainably grown food, with a brand that carries national appeal.
Eco-Tourism and Outdoor Lodging The state is well known for hiking, skiing, and fall foliage, driving demand for nature-based accommodations such as cabins and glamping.
Craft Food and Beverage Production Vermont is recognized for maple syrup, craft beer, cider, and cheese, with loyal local and national markets.
Renewable Energy Services Strong environmental policies support opportunities in solar installations, energy audits, and sustainable construction services.
Senior Home Care and Wellness An aging population and limited rural healthcare access create consistent demand for in-home senior care and wellness services.

If you’re launching a business in Vermont, success comes from tapping into what the state already values: clean living, handmade quality, and community trust. Whether you’re farming, brewing, or building for the future, Vermont rewards businesses that stay true to its roots.

Expand into Vermont with RemotePeople

A stable economy with continuous growth in addition to expanding sectors such as tourism, manufacturing, and services make Vermont the ideal choice for business expansion. 

The state’s economic strength is supported by ongoing international exports and government incentives to attract foreign businesses. Incentives are available in the form of tax credits, rebates, and grants, depending on the sector and business performance. 

When it’s time to expand your workforce in Vermont, it is necessary to abide by the state’s local labor laws. This includes implementing regulations that uphold employee rights and workplace conditions. 

To help you hire the top talent in Vermont, partner with the trusted team at RemotePeople. The talent acquisition experts have continued to assist international businesses with smooth market entry that is efficient, affordable, and compliant. 

Ready to transform Vermont’s unique edge into your win? Reach out to RemotePeople today to launch your venture.