Virtual Assistant Taxes in Vermont - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for a Virtual Assistant in Vermont

The Green Mountain State offers a beautiful backdrop for the growing number of virtual assistants, but navigating the tax landscape requires careful attention. As a self-employed professional providing services remotely, understanding both federal and Vermont tax obligations is crucial for financial success.

Federal law requires all self-employed individuals, including virtual assistants, to report income and expenses on Schedule C (Profit or Loss From Business) with Form 1040. Earnings exceeding $400 necessitate the payment of self-employment tax, covering both Social Security and Medicare contributions. Accurate record-keeping throughout the year is paramount to ensure compliance and maximize potential deductions.

How Vermont Handles Gig Worker Taxes

As a resident of Vermont, a state income tax return is required regardless of income level. Vermont operates on a graduated income tax system, meaning the tax rate increases as income rises. For the 2025 tax year, Vermont utilizes Form INC-100, Individual Income Tax Return, as the primary form for self-employed individuals to report their income. This form requires reporting net earnings from Schedule C as part of your overall adjusted gross income. Vermont also requires taxpayers to calculate and pay estimated taxes quarterly if they expect to owe $500 or more in state income tax. These payments are made using Form VT-ES, Estimated Income Tax Payment. Failure to make timely estimated tax payments can result in penalties. Vermont’s tax rates for 2025 are expected to remain consistent with prior years, ranging from 3.2% to 8.75% based on income brackets. It’s important to note that Vermont also has a property tax credit available to residents, which may be impacted by self-employment income. Detailed information regarding Vermont tax laws and forms can be found on the Vermont Department of Taxes website: https://tax.vermont.gov/. Staying informed about any changes to Vermont tax legislation is vital for accurate filing.

Key Tax Deductions for Home-Based Virtual Assistants

• Home Office Deduction: The home office deduction allows virtual assistants to deduct expenses related to the portion of their home exclusively and regularly used for business. “Exclusive use” means that space is only used for work, and “regular use” means it’s used consistently for business activities. Taxpayers can choose between the simplified method, a standard deduction of $5 per square foot of the home used for business, up to a maximum of 300 square feet, or the actual expense method, which involves calculating the percentage of the home used for business and deducting a proportionate share of mortgage interest, rent, utilities, and other related expenses.
• Hardware & Software: The cost of essential hardware, such as computers, webcams, and printers, is generally deductible. Software subscriptions vital to the business, including programs like Adobe Creative Cloud, project management tools, and website hosting fees, are also deductible expenses.
• Internet & Phone Bill: If a portion of your internet and phone service is used for business, you can deduct the business-use percentage. For example, if 60% of your internet usage is for client work, you can deduct 60% of the total bill.

Note on Mileage: As a home-based worker, mileage is not a primary deduction. However, mileage can be claimed for occasional client meetings, trips to purchase supplies, or other work-related errands using the standard mileage rate or actual expenses.

The 15.3% Self-Employment Tax Explained

The 15.3% self-employment tax comprises two components: 12.4% for Social Security and 2.9% for Medicare. This tax is essentially the equivalent of the employer and employee portions of these taxes when working for a traditional employer. Taxpayers can deduct one-half of their self-employment tax from their gross income when calculating their adjusted gross income.