Vermont Child Care Contribution: 0.44% Employer Payroll Tax, 0.11% Employee Share and the Self-Employed Rate
Vermont Child Care Contribution: 0.44% Employer Payroll Tax, 0.11% Employee Share and the Self-Employed Rate
If you have employees working in Vermont or you earn self-employment income in Vermont, you owe the vermont child care contribution. Act 76 of 2023 created it, and the Department of Taxes has collected it since July 1, 2024. It is a Vermont tax. It is not a federal tax, it is not an optional deduction you can skip, and it does not replace Vermont income tax withholding. This guide covers the rates, who owes what, how employers remit it, and where the forms and due dates live.
This guide is informational content, not legal or tax advice. Rules can change, and your situation may call for a CPA or attorney.
The Three Rates at a Glance
The contribution works differently for employers, employees and self-employed people. Here is the full picture in one table.
| Who pays | Rate | What it applies to | Limit |
|---|---|---|---|
| Employer | 0.44% | All wages earned in Vermont, as defined in 26 U.S.C. 3401 (generally the wages subject to federal income tax withholding) | Employer pays the amount not withheld from employees |
| Employee share (withheld by employer) | Up to 0.11% | The employee's Vermont wages | Capped at 25% of the 0.44% employer rate, which equals 0.11% |
| Self-employed | 0.11% | Net self-employment income earned in Vermont | No income cap |
Note the difference between the self-employed rate and the federal self-employment tax. The Vermont contribution has no income cap, so every dollar of Vermont net self-employment income is subject to the 0.11% rate.
How Employers Owe It
As an employer, the Child Care Contribution is your cost. You owe 0.44% on all wages earned in Vermont. The law lets you recover part of that cost from your employees, but only in a limited way:
- You may withhold up to 0.11% of each employee's wages. That is 25% of the 0.44% employer rate.
- You choose the amount. You can withhold any amount from zero up to the 0.11% cap.
- You may treat employees differently. One employee can have a different withholding amount than another.
- You pay the rest. Whatever you do not withhold is your expense.
Employees file nothing for the contribution. Any amount you withhold appears on their Form W-2, so they can see it at tax time.
Example: Paying the Contribution on $50,000 of Vermont Wages
Suppose an employee earns $50,000 in Vermont wages during the year. Your employer share is 0.44%, which is $220. If you withhold the maximum employee share of 0.11%, that is $55 from the employee. You pay the remaining $165 yourself. If you withhold nothing, you pay the full $220. Whatever you choose, the total owed to Vermont for that employee is the same $220.
Out-of-State Employers
The contribution is not limited to businesses headquartered in Vermont. An out-of-state employer owes it on the wages of any employee who works in Vermont. That includes an employee who works from a home office in Vermont, even if the company has no other Vermont presence. If you have a remote worker in Vermont, the contribution probably applies to that worker's wages.
Remitting and Reporting the Contribution
Employers remit the Child Care Contribution along with Vermont income tax withholding. It follows the same filing frequency and the same penalty rules as your withholding. You do not file a separate return for it.
The contribution is reported on new lines of the quarterly reconciliation, Form WHT-436. Quarterly due dates fall around the 25th to 27th of the month after the quarter ends. For example, the return for the quarter ending September 30, 2026 is due October 26, 2026. Each year, you also file the annual reconciliation, Form WHT-434, which is due on the last day of January or the next business day.
Check the exact due dates on the Department of Taxes calendar before you file, since the day can shift with weekends and holidays.
- Calculate the 0.44% employer share on each employee's Vermont wages for the period.
- Decide, for each employee, whether to withhold any employee share, up to 0.11%.
- Remit the total with your Vermont withholding on your normal schedule.
- Report the contribution on the WHT-436 for the quarter, and reconcile it on the WHT-434 at year end.
Self-Employed Owners
If you are self-employed, you owe 0.11% on your net self-employment income earned in Vermont. There is no income cap. You report the contribution on your Vermont personal income tax return. Estimated payments follow the same schedule as your Vermont estimated income tax payments, so the contribution moves through the same calendar you already use.
If you have both a salary from a Vermont employer and self-employment income, you owe the employee share on the wages and the self-employed rate on the business income. Your payroll withholding does not cover your self-employment contribution.
Child Care Operators and Licensing
If your business is a child care operation, the contribution is only one of the state requirements you face. The Department for Children and Families (DCF) oversees child care under 33 V.S.A. 3502. Family child care homes must be registered with DCF, and child care facilities must be licensed. A person caring for the children of not more than two other families needs neither a registration nor a license.
The line between those categories is important. If you care for children from three or more families, confirm your status with DCF before you open. If you hire staff, the contribution applies to their Vermont wages whatever your licensing category is.
Common Mistakes to Avoid
- Treating it as optional. The 0.44% employer share is owed whether or not you withhold anything from employees.
- Withholding more than 0.11%. The employee share has a ceiling. Anything above it must come from your own funds.
- Forgetting remote workers. Out-of-state employers owe the contribution on employees who work in Vermont, including from home.
- Assuming it is a federal payroll item. It is a Vermont obligation reported to the Department of Taxes, and it is separate from federal payroll filings.
- Skipping the self-employed rate. Sole proprietors and single-member owners with Vermont net self-employment income owe the 0.11% rate, and the Vermont return is where it is reported.
Official Resources
- Department of Taxes: Child Care Contribution for the rules, rates and filing guidance
- Vermont Department of Taxes for forms, due dates and account access
- Vermont Secretary of State, Business Services Division for entity registration, which comes before any payroll registration
- Vermont Small Business Development Center for free, confidential help with payroll planning
- The Department for Children and Families, for child care registration and licensing questions
When to Get Professional Help
The contribution is simple at the rate level but easy to get wrong in practice. Multi-state payroll, remote workers in Vermont, mixed wage and self-employment income, and child care operations all create edge cases. Talk to a CPA who handles Vermont payroll before you set your employee withholding policy, and an attorney if your business structure or licensing status is unclear.
This article is informational content, not legal or tax advice. It does not create an attorney-client or accountant-client relationship. Confirm current rates, due dates and forms with the Vermont Department of Taxes before you file.