Vermont has not adopted an elective pass-through entity tax; pass-through income is taxed to the owners

# Summary

Vermont has not enacted a pass-through entity tax. There is no Vermont PTET election, no PTET rate, no election deadline, and no entity-level tax that an owner may claim as a credit against Vermont personal income tax.

Vermont taxes pass-through income the traditional way: the S corporation, partnership, or LLC files Form BI-471, reports each owner's share on Schedule K-1VT, and the owners pay Vermont income tax on that share on their own returns.

This matters because the surrounding forms are easy to mistake for a PTET. Vermont does impose a $250 minimum entity tax, does collect tax at the entity level for nonresident owners (composite or non-composite), and numbers one of its schedules BI-477 — but none of these is an elective entity-level income tax.

# The Department's own description of the regime

From the Vermont Department of Taxes' Business Entity Income Tax page: "Most business entities will file form BI-471, Business Income Tax Return. Generally, a minimum tax of $250 is due. Additional forms and schedules may be required. Business entities owned exclusively by Vermont residents, with income and loss deriving only from Vermont, may file the simplified form BI-476, Business Income Tax Return (For Resident Only). The Vermont minimum entity tax of $250 must be paid with the return."

The page describes the entire business entity income tax system — filing, extensions, nonresident withholding estimated payments — and offers no elective entity-level tax anywhere in it.

The 2025 BI-471 instruction booklet states the filing rule the same way: "Effective for tax years beginning on or after Jan. 1, 1997, every Subchapter S Corporation, Partnership, and Limited Liability Company which engages in activities in Vermont must file a return with the Commissioner of Taxes." Nothing in the 2025 booklet describes an election, an electing-entity rate, or an owner credit for entity-paid tax.

# What does apply at the entity level (and is not a PTET)

Minimum entity tax. A $250 minimum tax is due with Form BI-471 (or the simplified BI-476 for wholly Vermont-resident entities). It is a fixed minimum, not a tax on income the owners can credit.

Nonresident owners — composite or non-composite. For nonresident shareholders, partners, and members the entity remits Vermont tax on their Vermont-source income: Schedule BI-473 if the entity files a composite return (the booklet notes "partial composite" returns are not accepted), or Schedule BI-472, Vermont Non-Composite, otherwise. Both are collection mechanisms for the owners' own liability, not an entity-level tax the owners elect into. Estimated payments for nonresident owners are due on the 15th day of the 4th, 6th, and 9th months of the tax year and the 1st month of the following year.

S corporation entity-level items. The BI-471 instructions apply the corporate income tax rate to a Subchapter S corporation's federally taxable items such as built-in gains, capital gains, or LIFO recapture. This is the only true entity-level income tax in the package, it is not elective, and it exists for a different reason.

Schedule BI-477. Despite a form number that invites the assumption, BI-477 is the "Vermont Income Adjustment Calculation: Pass-Through Vermont Sourcing" schedule filed with BI-471 to determine Vermont-sourced income. It is not a PTET election form.