Vermont $250 Minimum Entity Tax: Who Owes It (S Corps, Partnerships, LLCs Taxed as Partnerships) and BI-471 vs BI-476
Vermont $250 Minimum Entity Tax: Who Owes It (S Corps, Partnerships, LLCs Taxed as Partnerships) and BI-471 vs BI-476
For most people forming a Vermont LLC, the first tax question is not the rate. It is whether the $250 minimum entity tax applies at all. That depends on how the entity is taxed for federal purposes, not just on the fact that it is an LLC. Getting this wrong means either filing a return you did not need or missing a $250 payment you did owe, so it is worth sorting out before your first filing deadline.
This guide covers which entities owe the $250, which do not, how to choose between the two Department of Taxes returns (BI-471 and BI-476), and the due date, extension, and owner-level rules that come with them.
What the $250 minimum entity tax is
Vermont charges a minimum annual entity tax of $250 on certain pass-through businesses. A pass-through entity reports its income on its owners' personal returns, so the entity itself generally pays no income tax at the entity level. The $250 is the entity-level floor that still applies in those cases. You pay it with the business income tax return, not on a separate form.
Who owes the $250
The tax applies to three types of pass-through businesses:
- S corporations, under 32 V.S.A. 5915
- Partnerships, including general partnerships, under 32 V.S.A. 5921
- LLCs taxed as partnerships, under 32 V.S.A. 5921
A multi-member LLC that has not elected corporate treatment is generally taxed as a partnership for federal purposes. An LLC that elects S status is taxed as an S corporation and falls under the first category. Either way, the question Vermont asks is how the entity is taxed, not what the entity is called.
Who does not owe the $250
- Disregarded single-member LLCs. An LLC with one owner that does not receive partnership treatment is taxed for state purposes as under the Internal Revenue Code. That means it owes no entity tax. Its main state obligation is the $45 annual report.
- Small passive investment partnerships. Under 32 V.S.A. 5921, a partnership whose activities are limited to maintaining and managing its intangible investments, with annual investment income of $5,000 or less and total assets of $20,000 or less, is exempt.
Two points cause the most confusion. A single-member LLC is exempt because it is disregarded for tax purposes, not because it is small. And a general partnership does not get the small-entity exemption just because it is informal. If it is a partnership and is not a passive investment partnership within the $5,000 income and $20,000 asset limits, the $250 applies.
Quick sorting by entity type
| Entity | Federal tax treatment | Owes the $250? |
|---|---|---|
| Single-member LLC, no S election | Disregarded | No |
| Multi-member LLC, no S election | Partnership | Yes |
| LLC that elected S status | S corporation | Yes |
| S corporation | S corporation | Yes |
| General partnership | Partnership | Yes |
| Passive investment partnership with investment income of $5,000 or less and assets of $20,000 or less | Partnership | No (small passive investment exemption) |
| C corporation | C corporation | Not this tax; pays Vermont corporate income tax instead |
BI-471 vs BI-476: which return to file
Both forms are Vermont business income tax returns filed with the Department of Taxes, and the $250 is paid with whichever one you file. The choice depends on who your owners are and where your income comes from. It does not depend on whether you are an S corp or an LLC. Do not pick a form based on the entity label.
| BI-471 | BI-476 | |
|---|---|---|
| What it is | General business income tax return | Simplified business income tax return |
| Who uses it | Entities that do not meet the BI-476 conditions | Entities owned exclusively by Vermont residents, with income and loss only from Vermont |
| Typical fit | Owners or income outside Vermont | A Vermont-only business with Vermont-resident owners |
If you are not sure which form fits, start with the two conditions for BI-476. If every owner is a Vermont resident and all income and loss comes from Vermont, the simplified return may work. If either condition fails, the general return is the one to use. Confirm the current instructions on the Department of Taxes Business Entity Income Tax page at tax.vermont.gov before you file.
Due dates, extensions, and payment
The $250 is due on the federal due date for the entity's return. For tax year 2025 calendar-year entities, that date is March 16, 2026. Two rules matter here:
- A federal extension automatically extends the Vermont filing date to 30 days beyond the federal extended date.
- The Vermont extension application is Form BA-403.
An extension extends the filing deadline, not the payment deadline. Tax is still due on the original date, so an extension that you request but do not pay by that date can leave you owing interest and penalties. If you expect to owe, pay the $250 by the original due date even if you file later.
Nonresident owners: WH-435 and composite returns
If an owner lives outside Vermont, the entity has to handle that owner's Vermont tax share. The entity makes estimated payments for nonresident owners on Form WH-435. Those payments 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. Check the WH-435 instructions for the exact dates that apply to your year.
Composite returns are a separate rule. An entity with more than 50 nonresident owners must file a composite return. Owners included in a composite return are relieved of filing their own Vermont return if they have no other Vermont activity.
What owners pay on the pass-through income
The entity's income passes through to its owners, who pay Vermont personal income tax at individual rates. For tax year 2025, the rates were 3.35%, 6.6%, 7.6% and 8.75%. For a single filer, the brackets that year were $49,400, $119,700 and $249,700. The tax year 2026 schedule had not been published as of October 28, 2026, so check tax.vermont.gov for current figures before you estimate owner tax.
Vermont has no franchise tax. For a pass-through entity, the entity-level state tax is the $250 minimum, and the rest of the income tax falls on the owners.
S corp vs LLC: does an S election avoid the $250?
No. An S election does not remove the $250. An LLC that elects S status is treated as an S corporation for this purpose and owes the tax. The election also adds obligations. You will run payroll for owner-employees and file the federal Form 1120-S. Vermont has no 'Schedule S' that replaces the state return. Choose S status for federal reasons, not to avoid the Vermont minimum.
If your entity has employees or withholds Vermont tax from pay, you also need a business tax account with the Department of Taxes. Register at tax.vermont.gov.
Steps to get this right
- Confirm how your entity is classified for federal tax purposes, using your federal return or your election paperwork.
- If you have one owner and no S election, confirm you owe no entity tax, then file only the annual report.
- If you are a partnership, check whether the passive investment exemption applies: activities limited to managing intangible investments, with income of $5,000 or less and assets of $20,000 or less.
- Choose BI-471 or BI-476 based on owner residency and where the income comes from.
- If any owner is a nonresident, plan WH-435 estimated payments and check whether a composite return is required.
- File by the federal due date, or file BA-403 for an extension and file by the extended date.
- Pay the $250 by the original due date.
Related filings: annual report and corporate tax
The $250 is separate from the Secretary of State annual report, which is a different filing with the Business Services Division. An LLC pays a $45 annual report fee, due March 31 for a calendar-year LLC. A corporation pays a $60 annual report fee, due March 15 for a calendar-year corporation. A missed annual report terminates the entity. Vermont does not use administrative dissolution, and a terminated entity can be reinstated, but reinstatement is far easier to avoid than to fix.
C corporations are outside this $250 tax. They pay the graduated corporate income tax: 6.0% on the first $10,000 of net income, 7.0% from $10,001 to $25,000, and 8.5% above $25,000, with a minimum annual tax set by Vermont gross receipts. The corporate return is Form CO-411.
Where to confirm before you file
- Vermont Department of Taxes: tax.vermont.gov
- Secretary of State, Business Services Division: sos.vermont.gov/business-services
- Business entity search and Online Business Service Center: bizfilings.vermont.gov
This guide is informational content, not legal or tax advice. Vermont tax rules, brackets, and form instructions change from year to year. Confirm current figures with the Department of Taxes, and talk with a qualified CPA or tax attorney before filing, especially if your entity has nonresident owners in several states, more than one class of owners, or a mix of partnership and corporate features.