Two traps. First, the $250 minimum entity tax is owed every year even by a dormant Vermont S corp with no income — and Vermont applies it broadly: there is no minimum dollar threshold of activity, so periodic activity in Vermont triggers it, and the "no Vermont activity" exception is narrow. Second, a $50 late-filing penalty applies to a BI-471 filed after the original due date EVEN IF NO TAX IS DUE, unless the entity timely filed Form BA-403 for extension. Filing late with a zero balance is not free.
Recognized automatically
S-corp election in Vermont
In short
$250 minimum annual entity tax on every Vermont pass-through entity, owed regardless of income. No franchise or net-worth tax. Vermont has NO pass-through entity tax (no SALT-cap workaround).
Does Vermont recognize the federal S election?
Vermont automatically recognizes your federal S election — there is no separate Vermont S-corp election. Your S corp files Form BI-471, Vermont Business Income Tax Return, and pays a $250 minimum entity tax every year even with no income. Income flows through to shareholders. If every owner is a Vermont resident and all income and loss derive only from Vermont, you may file the simplified Form BI-476 instead of BI-471 — but you still pay the $250.
Tax the entity still owes
MINIMUM ENTITY TAX: $250 per taxable year, imposed on every S corporation, partnership and LLC engaged in activities in Vermont for each taxable year beginning on or after January 1, 1998. Reported on Form BI-471, Line 1. Quoted from the 2025 Form BI-471 instructions (Rev. 10/25) and corroborated by the Vermont Department of Taxes business income tax page: "Most business entities will file form BI-471, Business Income Tax Return. Generally, a minimum tax of $250 is due." DUE DATE: "Subchapter S Corporation, Partnership, and Limited Liability Company returns are due on the [federal date]... generally be March 15. For fiscal year filers, the return is due the 15th day of the third month." The $250 entity tax and any additional tax must be paid by the original due date; a federal extension gives 30 extra days beyond the extended federal due date but Form BA-403 must be filed by the original due date, and an extension to file is not an extension to pay. NONRESIDENT ESTIMATED PAYMENTS: made on Form WH-435 at the Vermont individual income tax rate — "For tax years 2018 and forward, that rate is 6.6%." Estimated payments are due the 15th day of the 4th, 6th and 9th months of the tax year and the 1st month of the following year — for calendar-year entities, April 15, June 15, September 15 and January 15. An entity with a single nonresident owner and prior-year liability of $250 or less (or two or more owners and $500 or less) may remit annually on January 15 instead of quarterly. PENALTIES: 5% failure-to-pay/file penalty; a $50 late penalty applies for a return filed after the original due date even if no tax is due, unless timely filed under extension. SIMPLIFIED RETURN: entities owned exclusively by Vermont residents with income and loss deriving only from Vermont may file Form BI-476; the $250 minimum still applies and may be paid via myVTax.
Registering for payroll
An S corp paying wages must register for Vermont income tax withholding with the Department of Taxes (Form BR-400, Application for Business Tax Account, filed via myVTax) and for unemployment insurance with the Vermont Department of Labor.
Annual filings
Form BI-471, Vermont Business Income Tax Return — due the 15th day of the third month after the close of the taxable year (generally March 15); pays the $250 minimum entity tax. Form BI-476 may be substituted if all owners are Vermont residents and all income/loss derives only from Vermont. Schedule BI-472 (Non-Composite) and/or BI-473 (Composite) as applicable. Schedule BI-477, Vermont Income Adjustment Calculation: Pass-Through Vermont Sourcing — required for years beginning on or after 1/1/2023 to determine sourcing and apportionment (Schedule BA-402 is no longer used with BI-471). Schedule K-1VT to each shareholder. Form WH-435 for nonresident estimated payments (April 15 / June 15 / September 15 / January 15). Form BA-403 for extension, due by the original return due date. Form BI-470 payment voucher if paying by check. SEPARATELY, an annual report is filed with the Vermont Secretary of State.
Pass-through entity tax
NO. Vermont has NO pass-through entity tax and offers no SALT-cap workaround. This negative is now established from three independent primary sources rather than inferred: (1) the official codified Vermont statutes at legislature.vermont.gov — 32 V.S.A. chapter 151 (Income Taxes) contains thirteen subchapters (Definitions; Taxation of Individuals, Trusts and Estates; Taxation of Corporations; Withholding at Source; Estimations; Returns; Payment; Deficiencies; Enforcement; Confidential Preparation; Financial Services Development Tax Credit; Setoff Debt Collection; Franchise Tax on Waste Facilities) and there is no pass-through-entity-tax subchapter and no PTET section anywhere in the chapter; (2) the 2025 Form BI-471 instructions (Rev. 10/25) contain ZERO occurrences of 'PTET', 'pass-through entity tax' or 'elective'; (3) the Vermont Department of Taxes business income tax page lists the complete business income form set — BI-470, BI-471, BI-472, BI-473, BI-476, BI-477, BR-400, BR-401, CO-411 — and there is no PTET form. The earlier S.45 PTET bill died in the 2023-2024 biennium; in the 2025-2026 biennium S.45 is a different bill entirely (2026 Act 61), since Vermont bill numbers reset each biennium.
The mistake owners make most often in Vermont
Filing your federal Form 2553
Businesses operating in Vermont send Form 2553 to the IRS Kansas City service center — fax 855-887-7734. Full address and filing checklist for Vermont.
Frequently asked questions
Does Vermont require a separate S-corporation election?
No. Vermont does not require a separate state election. Vermont automatically recognizes your federal S election — there is no separate Vermont S-corp election. Your S corp files Form BI-471, Vermont Business Income Tax Return, and pays a $250 minimum entity tax every year even with no income. Income flows through to shareholders.
What tax does an S corporation pay in Vermont?
$250 minimum annual entity tax on every Vermont pass-through entity, owed regardless of income. No franchise or net-worth tax. Vermont has NO pass-through entity tax (no SALT-cap workaround).
Where do I file Form 2553 from Vermont?
With the IRS Kansas City service center. Fax 855-887-7734, or mail to Department of the Treasury, Internal Revenue Service, Kansas City, MO 64999.
What is the most common S-corp mistake in Vermont?
Two traps. First, the $250 minimum entity tax is owed every year even by a dormant Vermont S corp with no income — and Vermont applies it broadly: there is no minimum dollar threshold of activity, so periodic activity in Vermont triggers it, and the "no Vermont activity" exception is narrow. Second, a $50 late-filing penalty applies to a BI-471 filed after the original due date EVEN IF NO TAX IS DUE, unless the entity timely filed Form BA-403 for extension. Filing late with a zero balance is not free.
Compare with other states: Virginia, Washington, West Virginia, Wisconsin, Wyoming, Alabama.
Sources
File your Form 2553 correctly
Scorply completes your federal election and includes a Vermont guide in your packet, so you know exactly what else you owe here.
Start my Form 2553Researched from official Vermont sources and verified July 30, 2026. State tax rules change. This is general information, not tax advice — confirm with the state or a CPA before you rely on it.