How Vermont withholds on a bonus
Vermont defines its supplemental withholding differently from every other state: 30% of the federal withholding on the same wages. At the federal flat rate of 22%, that is 6.6% of the bonus; on supplemental wages above $1 million, where the federal rate is 37%, it becomes 11.1%. On a $10,000 bonus the percentage method withholds $2,200 federal, $620 Social Security, $145 Medicare and $660 Vermont, leaving $6,375. Vermont has no local income taxes.
A $60,000 single filer's actual Vermont marginal rate is 6.6% (the bracket from $49,400 to $119,700 of taxable income), so the 30%-of-federal rule happens to land almost exactly on the tax owed at that salary; for lower earners in the 3.35% bracket it over-withholds. Under the aggregate method Vermont applies its brackets to the combined paycheck instead; the federal line rises to about $2,700, and Vermont's 30% of that rises with it.
What the withholding means for your Vermont return
For a middle earner the Vermont line on a bonus settles close to even; for a filer in the 3.35% bracket, roughly $325 per $10,000 returns. The federal 22% is above a $60,000 filer's 12% to 22% marginal rate, so roughly $750 of federal withholding returns as well. New Hampshire residents who earn a bonus for work in Vermont are withheld for Vermont on it. The Vermont paycheck calculator shows the marginal rates for any salary. Allowances on Form W-4VT do not change Vermont's supplemental withholding, which is fixed at 30% of the federal amount; they apply only under the aggregate method.