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NEW VT Tax on Net Self-Employment Earnings

Part of Act 76 of 2023 enacted by the Vermont State Legislature directs the Vermont Department of Taxes to collect a 0.11% tax on self-employment earnings referred to as the Vermont Child Care Contribution.

The prior post covered the 0.44% payroll tax on wages.

1. The CCC uses the federal definition of net self-employment income; any income subject to federal self-employment tax is subject to the new CCC. However, unlike federal self-employment taxes, there is no cap on self-employment income subject to the CCC.

2. Individuals with self-employment income will report self-employment income and remit CCC payments to the Department as part of their Vermont Personal Income Tax filing each year.  Estimated payments for CCC shall be paid in the same manner and frequency as estimated personal income tax payments. Additional tax guidance and updated forms will be available on this page as they are finalized.

The following is an example of figuring the cost of the CCC tax on self-employment net income:

Additionally, there is no income cap on the CCC tax, if you have no self-employment earnings for the year (you take a loss), then no tax is due and for non-residents, the CCC applies to self-employment income earned in the State of Vermont.

Vermont has not provided guidance on if the CCC tax impacts net earnings from farming reported on Schedule F.

You will not have to indicate the amount of the tax due outside of your Vermont state tax return. The portion of the CCC tax can be lumped together with any quarterly tax payments and any income tax amount due.

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