Moving from Canada to Vermont: Taxes

Vermont sits directly across the border from Quebec, with I-89 running from the Highgate Springs crossing down through Burlington and on to the state capital in Montpelier. It’s the most Francophone-adjacent state in New England, with a long history of Quebecois settlement, cross-border shopping, and family ties that make the move feel less foreign than most. Burlington has built a genuine tech base around Dealer.com (now part of Cox Automotive) and a cluster of smaller software shops, alongside the University of Vermont Medical Center as the region’s largest employer and National Life Group anchoring the insurance sector in Montpelier. The outdoor lifestyle, skiing at Stowe and Sugarbush, mountain biking, lake access, draws a specific kind of mover who’s trading urban Quebec for a smaller, quieter place. Vermont taxes income on a graduated scale that runs higher than most of its neighbors, and property tax carries a heavy load because of how the state funds education. The federal cross-border mechanics (departure tax, RRSP, FBAR) are the same as any Canada-to-US move; this page covers what’s specific to Vermont.

Why are people moving through this corridor?

I-89 runs straight from the Highgate Springs/Philipsburg crossing down through Burlington to Montpelier, making Vermont a natural landing spot for anyone leaving Montreal or the Eastern Townships. Burlington carries the state’s real economy: Dealer.com and Cox Automotive, UVM Medical Center, and a smaller software and outdoor-gear cluster, plus UVM itself as an education anchor. The ski towns (Stowe, Sugarbush, Killington) and the lake add a lifestyle pull that shows up in the data as a steady trickle of remote workers and early retirees, not just tech hires.

How does Vermont compare to Canadian provinces?

Vermont’s top income tax rate of 8.75% sits below most Canadian provincial top combined rates, but the comparison depends heavily on where in the bracket a mover’s income lands.

Jurisdiction	Top rate	Notes
Quebec	25.75%	On income above $126,000 (combined with federal, effectively higher)
Ontario	~20.5% (with surtax)	On income above $220,000
Vermont	8.75%	Starts around $230,000 taxable income (single)

A household moving from Quebec to Vermont at a $180,000 household income typically sees the state-level rate drop from the mid-20s (provincial only) into Vermont’s 6.6% to 7.6% range, a meaningful cut even before accounting for the separate federal US/Canada comparison, which is its own analysis.

How does Vermont’s income tax work?

Vermont uses four brackets: 3.35%, 6.6%, 7.6%, and 8.75%, with the top rate kicking in around $230,000 of taxable income for a single filer (higher for joint filers). Most cross-border professionals moving into Burlington land in the 6.6% or 7.6% bracket rather than the top one, though dual-income households or anyone in a senior tech or medical role can clear into 8.75% territory. There’s no local or city income tax layered on top anywhere in Vermont, and the state conforms to federal adjusted gross income as its starting point, which is what makes the RRSP question below straightforward.

Does Vermont tax RRSP withdrawals?

Because Vermont’s return starts from federal AGI, the treaty-based deferral on RRSP and RRIF growth under Article XVIII carries straight through to the state return with no separate state-level election required. Withdrawals get taxed by Vermont the same way they’re taxed federally, as ordinary income in the year received, once you’re a US resident. TFSA income doesn’t get treaty protection at the federal or state level, which is why the standard advice is to close the TFSA before departure rather than carry it across the border.

What happens on the Canadian side when I leave?

The standard departure sequence:

• Deemed disposition at fair market value of worldwide assets
• Final Canadian return from January 1 to the departure date
• Provincial tax at Quebec (or other province) rates on departure day
• T1161 and T1243 if applicable
• CRA non-resident notification
• RRSP left open, TFSA closed before the move

What about sales tax and property tax?

Vermont’s sales tax is 6% state-wide, with some towns adding a 1% local option tax on top, so the effective rate in parts of Burlington and a handful of other municipalities runs to 7%. Property tax is where Vermont runs notably high: effective rates typically land between 1.7% and 2.0% of market value, among the higher rates in New England, driven largely by the statewide education property tax that funds Vermont’s school system independent of a town’s own municipal rate. A $500,000 home at an 1.8% effective rate runs roughly $9,000 a year, before any local exemptions, which is a real budgeting line for anyone buying rather than renting.

What about estate tax and retirement income?

Vermont has its own estate tax, separate from the federal one, with a flat $5 million exemption, well below the federal exemption, and a flat 16% rate on the amount above that threshold. There’s no inheritance tax, but the $5 million threshold is low enough that a cross-border household with meaningful Canadian assets, a business sale, or life insurance proceeds should model this explicitly rather than assume federal exemption levels apply. On retirement income, Social Security is exempt from Vermont tax for most filers, phasing out above income thresholds tied to filing status, which matters for anyone drawing CPP alongside US Social Security once settled in Vermont.

What about remote work and Vermont’s small employer base?

Vermont is a small state with a short list of large employers: UVM Medical Center in healthcare, National Life Group in insurance, Dealer.com/Cox Automotive and a handful of smaller shops in tech, and UVM itself in education. A meaningful share of movers land in Vermont specifically to keep a remote job with a Montreal or Toronto-based employer while living in Burlington for the lifestyle, which raises the same source-of-income and permanent-establishment questions covered in the remote work guide. Vermont itself doesn’t apply an aggressive “convenience of the employer” rule the way New York does, so a genuine remote arrangement is generally treated as Vermont-source income taxed once, not double-counted.

How does Vermont compare to neighboring states?

Vermont’s 8.75% top rate sits above New Hampshire’s zero and above Maine’s 7.15%, and it’s close to but just under Massachusetts’s 9% surtax bracket for very high earners. Against New York, Vermont’s income tax is meaningfully lower at every bracket, though both states share the same weakness of high property tax funding local schools. For a Quebec household weighing entry points, Vermont trades New Hampshire’s zero income tax for a Francophone-friendly community, a genuine outdoor lifestyle, and a much shorter, simpler border crossing than routing through Boston or Albany.

What should I do next?

The Canadian exit follows the standard departure checklist. On the Vermont side, the main planning items are confirming which bracket your combined household income lands in, budgeting for the high effective property tax rate if you’re buying, and checking the $5 million estate tax exemption if a business sale or larger estate is part of the picture.

• Departure tax checklist, the full Canadian exit sequence
• US-Canada tax treaty explained, the framework behind RRSP deferral and credits
• RRSP and TFSA on a US move, federal treatment and reporting
• First US tax return after moving from Canada, the arrival-year mechanics
• State income tax for cross-border filers, how Vermont compares
• Canada departure tax (T1161/T1243), the exit filing detail
• Remote work cross-border tax, for the Montreal-employer-in-Vermont scenario
• Moving from Canada to New Hampshire, the no-income-tax neighbor
• Moving from Canada to Massachusetts, the nearby tech corridor
• Moving from Canada to Maine, the other Quebec-border New England state

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.