Vermont payroll setup for your first hire

Vermont takes state income tax from paychecks. Form WHT-436 also carries a 0.44 percent Child Care Contribution.

The Department of Taxes collects Vermont income tax withheld from wages. This is not Wyoming, Texas, Florida, New Hampshire, or South Dakota. Those states do not take state income tax from paychecks. Vermont does. A payroll login is not a withholding account.

The Form BR-400 instructions say a business that pays wages to employees who work in Vermont must withhold and send Vermont income tax when those wages are subject to federal withholding. The worker can live in Vermont or not. A nonresident is covered for services performed in Vermont. The start date on the registration is the date you began, or expect to begin, paying wages subject to Vermont withholding. That date can be later than the day the business opened. The withholding FAQ says you register for an employer withholding account. When you register a Vermont business tax account, answer the question about hiring employees. A yes answer prompts the Department to open the withholding account.

Register on myVTax. The account page says signing up is free. You can also use Form BR-400. The 2026 withholding instructions say the Department sets your filing frequency from your annual withholding totals. Those instructions do not print a dollar band for quarterly, monthly, or semi-weekly filing. Do not copy another state’s dollar bands onto Vermont. File and pay on myVTax, or use the paper forms the Department posts.

Have the employee complete a federal Form W-4 and Form W-4VT, the Vermont Employee’s Withholding Allowance Certificate. The hiring page names both forms. A federal Form W-4 does not replace Form W-4VT. The 2026 instructions say the Department strongly recommends that employers require Form W-4VT. Also ask for Form HC-2, Declaration of Health Care Coverage, when the health-care assessment applies. Keep Form HC-2. Do not send it to the Department.

Every withholding account files Form WHT-436, the Quarterly Withholding Reconciliation, even when no tax is due. Quarterly, monthly, and semi-weekly filers all file that return. The due dates are April 25, July 25, October 25, and January 25. If the date falls on a weekend or holiday, the return is due the next business day. A quarterly filer can pay with that return. A monthly filer still files Form WHT-436 on that quarterly date and sends each month’s money by the 25th of the next month. The first two months can ride Form WHT-430 if you cannot pay electronically. The third month rides Form WHT-436. A semi-weekly filer files Form WHT-436 electronically and pays electronically. File one Form WHT-436 for each account.

The Child Care Contribution, called CCC, rides that same return. It is not unemployment tax. It is not workplace injury insurance. 32 V.S.A. § 10553 says each employer pays the contribution on covered wages and sends it to the Department of Taxes as if it were Vermont income tax withholding, including the time and manner of payment. The rate is 0.44 percent of each employee’s covered wages. The employer may deduct and withhold from the employee not more than one quarter of that contribution. One quarter of 0.44 percent is 0.11 percent. The employer may withhold any amount up to that cap, or pay the whole contribution. The employer does not have to withhold the same amount from every employee. Self-employment income is a different 0.11 percent tax on the personal return. It is not this first-hire wage file.

The Child Care Contribution page says collection began July 1, 2024. Act 76 of 2023 gave the Department of Taxes the job. Covered wages are wages under the federal withholding definition, 26 U.S.C. § 3401, when Vermont income-tax withholding is required. Wages for work physically performed in Vermont count, including remote work from a Vermont home. Wages for work performed outside Vermont, paid by an out-of-state employer, are not subject to the contribution just because you withhold Vermont tax as a courtesy for a resident. The 2026 instructions print the same 0.44 percent rule. Part III of Form WHT-436 reports the contribution. Line 8 is wages on line 7 times 0.44 percent. Line 9 is the part employees contributed. Employers who must send withholding semi-weekly must also send the contribution semi-weekly.

The Health Care Fund Contribution Assessment is a third amount on the same quarterly return. It is not the Child Care Contribution. The assessment page still says to enter it in Part III of Form WHT-436. The October 2025 form puts the Child Care Contribution in Part III and the health-care contribution in Part IV. Use the parts on the current form. Form HC-1 is the worksheet. Do not send Form HC-1 to the Department. Keep it for three years. The worksheet asks whether you had five or more full-time-equivalent employees, all age 18 or older, in the previous quarter. If the answer is no, check the box that certifies no health-care contribution is due, and check line 10 on Form WHT-436. A shop hiring its first employee looks at the previous quarter. If that quarter had no such group of five, the worksheet says no contribution is due. If the answer is yes, the form prints a premium per adjusted uncovered full-time equivalent. For quarter endings from March 31, 2026, through December 31, 2026, that premium is $301.99. An employee under 18 at any point in the quarter is not an employee for this assessment. If you have no Form HC-2 on file for an employee who is not on your plan, the Department’s page says you must treat that person as uncovered. A first paycheck still needs the withholding account and the Child Care Contribution. The $301.99 line is not automatic on day one.

Unemployment starts at $1,500 in a quarter, or one person in 20 weeks. The 2026 wage base is $15,400. Most new employers pay 1 percent beginning July 1, 2026.

The Department of Labor collects state unemployment tax. That tax is often called SUTA, state unemployment tax, or SUI, state unemployment insurance. Official pages say unemployment insurance contributions. This department is not Hawaii’s Department of Labor and Industrial Relations. It is not Delaware’s Division of Unemployment Insurance. Withholding stays at the Department of Taxes. Unemployment stays here.

21 V.S.A. § 1301 is the regular-shop definition. An employing unit is an employer when, in any calendar quarter of the current or preceding calendar year, it paid $1,500 or more in wages for service in employment, or it had at least one person in employment for some portion of a day in each of 20 different weeks. Those weeks need not be consecutive. The same person need not work each of those days. When that employing unit becomes an employer during a calendar year, it is subject to the chapter for the whole of that calendar year. The employer-responsibility page restates the $1,500 quarter and the 20-week test. It also names other paths. Domestic service in a private home uses $1,000 in a quarter. Agricultural work uses $20,000 in a quarter, or 10 workers in 20 weeks. A church-exempt nonprofit, a government employer, a successor, and an employer already liable for federal unemployment tax have their own lines. This scorecard is the regular-business path.

This is not Hawaii’s rule that one person working any part of a day makes you an employer. This is not Montana’s $1,000-in-a-calendar-year test, and it is not Montana’s instruction to report that whole year back to January 1. Vermont’s statute says the shop is subject for the whole calendar year once it becomes an employer. It does not print Montana’s January 1 wage catch-up. This is not California’s $100-in-a-quarter test. There is no 15-day California clock on the Vermont pages. This is not Delaware’s 20-day Form UC-1. This is not Arkansas’s ten-day test.

Register a new business in Employer e-Services. The modernization page says new businesses use the how-to for registering a business. A business that was already registered does not re-register. Sign in with myVermont at labor.ui.vermont.gov. The 2022 paper Form C-1 says return the form within 10 days or use Employer Online Services. That paper form is not the only door the live site prints today. Hold the employer number the Department assigns. A federal Employer Identification Number, called EIN, is not that number. A Vermont withholding account is not that number.

The quarterly-reporting page says every employer who must pay unemployment insurance files a quarterly wage and contribution report. Electronic filing is mandatory. File it in e-Services. Wages paid in January through March are due April 30. April through June are due July 31. July through September are due October 31. October through December are due January 31. If the due date falls on a weekend, it moves to the next business day. Those dates are not the Form WHT-436 dates. Withholding’s quarter ends on the 25th. Unemployment’s quarter ends on the last day of the next month. The same page prints interest of 1.5 percent a month, and 18 percent a year. The amount due uses gross wages, the taxable wage base, and the rate assigned to you.

The 2026 wage-base release says the taxable wage base rises from $14,800 to $15,400 on January 1, 2026. Employers pay contributions on the first $15,400 an employee earns in calendar year 2026. The release cites 21 V.S.A. § 1321 for the annual adjustment. The tax-rate page prints the same $15,400 base. It says beginning July 1, 2026, the new-employer rate for most employers is 1 percent. An out-of-state corporation in North American Industry Classification System codes 236, 237, or 238 does not get that 1 percent line. Code 236, construction of buildings, is 1.9 percent. Code 237, heavy and civil engineering, is 4.0 percent. Code 238, specialty trade contractors, is 2.7 percent. Those three figures are industry averages, not the ordinary new-employer rate. The law requires at least one full calendar year of benefit liability before an experience rate. Most employers stay on the new-employer rate for at least two years. Use the rate on your live notice, not a number from a software page. Do not copy Hawaii’s $64,500 wage base or 2.4 percent new-employer rate onto Vermont.

New hire is a 10-day report to the Department of Labor. A 60-day separation starts a rehire. The quarterly wage report does not take it.

The new-hire report is a list of who you just hired. It is not a box on the quarterly wage and contribution report. It is not Form WHT-436. It is not Form BR-400. 33 V.S.A. § 4110 says every employer reports new hires to the Department of Labor. The report is due within 10 calendar days of the first date of employment. That date is the first day services are performed for compensation. The report needs the employee’s name, address, first date of employment, and Social Security number, plus the employer’s name, address, and federal identification number. The Department shares the report with the Office of Child Support. The Department may also use it for unemployment insurance. The statute allows an electronic report when practicable, or a Department form by fax, first-class mail, magnetic tape, or telephone.

The new-hire page says file in Employer e-Services. It restates the 10-day clock. It also says report a person who was employed by you before and has been separated for at least 60 consecutive days. The April 2026 requirements sheet says the new unemployment system requires electronic filing in e-Services, and it repeats the 10-day clock and the 60-day separation. Follow the live Department page for the file you send now. This 10-day report is not Georgia’s 10-day report to a separate new-hire center. This is not West Virginia’s 14-day clock. This is not a 20-day clock. This is not Alabama’s seven-day report. A quarterly wage report does not satisfy the 10 days.

Workplace injury insurance is due from the first employee. Vermont has no state fund.

The Department of Labor business-owner guide says you must buy workers’ compensation insurance if you hire one or more employees, full-time or part-time, in Vermont, unless the Department has approved you to self-insure. The same line covers employees you hire outside the state who work for you in Vermont. Post a notice of compliance where employees can see it. 21 V.S.A. § 687 is the security rule. An employer, other than the State, a county, or a municipality, secures compensation in one or more of these ways. Insure with a corporation or reciprocal authorized to write workers’ compensation in Vermont. Obtain guarantee insurance from a company authorized to do that business. Establish self-insurance the Commissioner approves, with a recommendation from the Department of Financial Regulation. Or join a nonprofit self-insurance corporation the Commissioner of Financial Regulation approves. A payroll login is not a policy. An unemployment account number is not a policy.

The guide’s exclusions are not the regular-shop test. A sole proprietor or a partner in an unincorporated business is not covered and is not required to buy coverage, and may choose it. A corporate officer may be excluded only with prior approval from the Department of Labor. Do not wait for three employees. Do not wait for five. This is not Wyoming’s extra-hazardous industry list. This is not North Dakota’s exclusive state fund. This is not Ohio’s Bureau of Workers’ Compensation monopoly. This is not Texas optional coverage. This is not Hawaii’s temporary disability insurance. Vermont does not put a temporary-disability policy on this first-hire desk.

Vermont Saves is not the first paycheck for a one-person shop.

Vermont Saves is a payroll-deduction IRA run by the Office of the State Treasurer. 3 V.S.A. § 532 creates the program. The program page says you must facilitate it if you have five or more employees, you have been in business at least two years, and you do not offer a qualified retirement plan. A shop hiring its first employee is not in that group. The employer does not fund the account. This is not the Child Care Contribution. It is not Form WHT-436. It is not the unemployment account.

How Gusto and Patriot describe Vermont

Confirm the withholding account on the Department of Taxes letter or on myVTax. Confirm the Child Care Contribution rate on 32 V.S.A. § 10553 and on Form WHT-436. Confirm the unemployment employer number and the rate on the Department of Labor notice and on e-Services. Confirm the 10-day new-hire file with the Department of Labor. Confirm a private workers’ compensation policy when you have one or more employees. Payroll software does not issue that policy.

Gusto’s Vermont help article says Middesk (Gusto’s business-verification company) may register state income-tax withholding and state unemployment insurance (SUI). The same article then tells a Vermont shop to register on its own with the Secretary of State, the Department of Taxes, and the Department of Labor. It names the Department of Taxes for income-tax withholding, Health Care Coverage, called HCC, and the Child Care Contribution. It names the Department of Labor for unemployment tax. Those two tax doors match the Department pages. It says register the business tax account on myVTax. That portal matches the account page. It says an online registration brings the account number in 5 to 7 days, and mail or fax takes 10 business days. The Department’s myVTax account page does not print those clocks. Use the letter you receive, not the vendor clock. The article says the withholding account starts with WHT, then 10 or 11. The Department pages linked here do not print that digit pattern. That pattern is what the software page says. The article says unemployment tax starts at $1,500 in a quarter, or one employee for 20 or more weeks. That pair matches 21 V.S.A. § 1301. It says the employer number and the rate arrive about two weeks after you register online. The Department’s rate page does not print a two-week clock. The article says if you do not have an assigned rate yet, enter the new-employer rate and update it when the notice arrives. It does not print the 1 percent figure. The rate page does. The article says the Child Care Contribution is 0.44 percent from July 1, 2024, and that you may deduct up to 25 percent, which is 0.11 percent, from wages. Those figures match the statute. It also says the employee percentage applies to all Vermont employees, and that after a quarter is paid you can change it only for the next quarter. The Department says you do not have to withhold the same amount from every employee. The article says some shops may be exempt from the health-care assessment at a certain full-time count, and it tells you to check the Department. Form HC-1 prints the five-employee previous-quarter question and the $301.99 premium. The article does not print those. The article says a notarized power of attorney goes to the Department of Labor before Gusto can file unemployment. It lists Form WHT-436, Form WHT-430, Form WHT-434, Form C-101, and a new-hire report. Form WHT-436 matches the instructions. The quarterly-reporting page calls the unemployment file the Quarterly Wage and Contribution Report. It does not print the label C-101. The article does not print the 10-day new-hire clock. It does not say Vermont has no state injury fund. Read Gusto’s Vermont help article. See Gusto on the directory.

Patriot’s registration article says register withholding for state income tax, called SIT, online via the Vermont Secretary of State. The withholding door on the Department of Taxes account page is myVTax, or Form BR-400. The article does not name myVTax or Form WHT-436. The article says register unemployment online with the Department of Labor, and that quarterly wages and contributions must be filed electronically. That electronic rule matches the quarterly page. It says most new employers have a SUTA rate of 1 percent for 2026, and that out-of-state construction codes 236, 237, and 238 get a different new-employer rate. The 1 percent line and those three codes match the rate page. The article does not print 1.9 percent, 4.0 percent, or 2.7 percent. Use the rate on your live notice. The article says workplace injury insurance is due with at least one employee, through a private provider or a state-operated fund. The one-employee line matches the business-owner guide. The state-fund line does not. That guide and 21 V.S.A. § 687 do not offer a state fund. The article tells the employee to complete Form W-4VT and a federal Form W-4. That pair matches the hiring page. It puts the new-hire report online within 10 days of hire or rehire with the Department of Labor. The 10-day clock matches 33 V.S.A. § 4110. The article does not print the 60-day separation. Patriot’s tax article says Full Service files unemployment on Form C-101, income-tax withholding on Form WHT-436, and both the employee and employer Child Care Contribution on that same Form WHT-436. Form WHT-436 matches the instructions. The C-101 label is the name on the software page for the report the Department calls the Quarterly Wage and Contribution Report. The article does not mention the Health Care Fund Contribution Assessment. The registration article also says that beginning in 2025 or 2026, employers with five or more employees must enroll in Vermont Saves or offer another qualifying plan. The Treasurer’s page adds two more tests. The shop must have been in business at least two years, and it must not already offer a qualified plan. A one-person first hire is not that file. Read Patriot’s registration article and Patriot’s Vermont payroll-tax article. See Patriot on the directory.

What still sits on the employer

• Open withholding with the Department of Taxes on myVTax, or on Form BR-400. Answer yes to hiring employees. Hold the withholding account the Department assigns. A federal EIN is not that account.
• Have the employee complete Form W-4VT and a federal Form W-4. A federal Form W-4 does not replace Form W-4VT. Keep Form HC-2 when the health-care assessment applies. Do not send Form HC-2 to the Department.
• File Form WHT-436 every quarter, due April 25, July 25, October 25, and January 25, even when no tax is due. Pay on the quarterly, monthly, or semi-weekly clock the Department assigns. The 2026 instructions do not print dollar bands for those clocks.
• Pay the Child Care Contribution of 0.44 percent on wages subject to Vermont withholding. You may withhold at most 0.11 percent from an employee. You may pay the rest, or all of it. You do not have to use the same employee share for every worker. Report it in Part III of Form WHT-436. Send it on the same clock as withholding.
• On Form HC-1, answer whether the previous quarter had five or more full-time-equivalent employees age 18 or older. If it did not, certify that no health-care contribution is due. If it did, use the premium on the current form. For quarter endings from March 31, 2026, through December 31, 2026, that premium is $301.99 per adjusted uncovered full-time equivalent. The older assessment page still says Part III. The current form uses Part IV.
• Register unemployment in Employer e-Services when you hit $1,500 in a quarter or one person in 20 weeks. Once you become an employer during a calendar year, 21 V.S.A. § 1301 says you are subject for the whole of that year. The 2022 paper Form C-1’s 10-day line is not the only door the live site prints.
• Enter the unemployment rate from the live notice. The rate page prints a new-employer rate of 1 percent for most employers beginning July 1, 2026. Foreign construction codes 236, 237, and 238 are 1.9 percent, 4.0 percent, and 2.7 percent. The 2026 taxable wage base is $15,400.
• File the quarterly wage and contribution report in e-Services by the last day of the month after the quarter. That calendar is not the Form WHT-436 calendar.
• File the 10-day new-hire report with the Department of Labor. A separation of at least 60 consecutive days starts a rehire. A quarterly wage report does not satisfy that clock.
• Buy workers’ compensation from an authorized insurer, or qualify as self-insured, when you have one or more employees. Vermont has no state fund. Vermont Saves waits until you have five or more employees and at least two years in business, and you do not already offer a qualified plan. Payroll software does not issue the injury policy.
• Do not copy another state’s clock onto Vermont. Vermont does not use California’s $100-quarter test. Vermont does not use Hawaii’s one-day unemployment test. Vermont does not use Montana’s $1,000-year test or Montana’s report-the-year-back-to-January-1 rule. Vermont does not use Delaware’s 20-day Form UC-1. Vermont does not use Wyoming’s rule that there is no paycheck withholding. Vermont does not use a 20-day new-hire clock. Vermont does not use Georgia’s separate new-hire center. Vermont does not use Alabama’s seven-day new-hire clock. Vermont does not use West Virginia’s 14-day new-hire clock. Vermont does not use North Dakota’s exclusive state fund. Vermont does not use Wyoming’s extra-hazardous state fund. Vermont does not use Washington’s rule that every ordinary shop buys the state fund. Vermont does not use Ohio’s Bureau of Workers’ Compensation monopoly. Vermont does not use Texas optional coverage. Vermont does not use Georgia’s, North Carolina’s, or Virginia’s three-employee wait. Vermont does not use Florida’s or South Carolina’s four-employee wait. Vermont does not use Mississippi’s, Alabama’s, or Tennessee’s five-employee wait. Vermont does not use Hawaii’s temporary disability insurance or prepaid health care.

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