Is Vermont an Expensive State to Live In?

The cost of living encompasses the financial demands required to maintain a certain standard of living in a specific location. It includes expenses such as housing, food, transportation, healthcare, and taxes. This article explores the diverse factors contributing to Vermont’s cost of living, providing insights for residents and prospective movers.

Understanding Vermont’s Major Expenses

Housing expenses in Vermont often fluctuate depending on location and property type. The average monthly rent across the state is $1,560, which is slightly below the national average of $1,645. Urban areas like Burlington present higher rental costs, with a one-bedroom apartment averaging $1,700 to $1,735 per month and two-bedroom units around $2,467. For those looking to purchase, the median home price in Vermont ranges from $386,000 to $421,400, while the national median is higher, often above $436,000.

Utility costs in Vermont tend to be higher than the national average, largely due to the state’s colder climate and demand for heating. Residents typically pay around $324.49 monthly for essential services like gas, electricity, water, and sewer. Including internet and phone services, the total monthly utility bill can reach about $624.49, compared to the national average of $609.90. Heating expenses are a significant consideration, with firewood being a popular fuel source for many households.

Transportation expenses in Vermont generally align with national averages. The price of gasoline often hovers around $3.09 to $3.49 per gallon, which is comparable to or slightly above the national average. Vehicle ownership is often necessary given the state’s rural landscape, and while gas prices are manageable, maintenance can add up due to winter conditions. Car insurance premiums in Vermont are notably lower than the national average, with full coverage policies averaging between $711 and $1,319 annually, positioning Vermont among the more affordable states for auto insurance.

Groceries and everyday goods represent a substantial portion of living expenses in Vermont, ranking among the highest nationally, second only to Hawaii. Residents spend approximately 40% more on groceries than the national average, totaling around $497.21 per month. This elevated cost reflects the state’s rural nature and the logistical challenges of supplying goods to smaller markets. While the state’s emphasis on local and organic produce is appealing, it can also contribute to these higher consumer prices.

Healthcare costs in Vermont are also a significant concern, ranking among the highest in the nation and continuing to rise. The monthly cost for a typical health insurance plan on the state’s marketplace has nearly doubled in recent years, reaching approximately $948. Projections for 2025 indicate an average annual cost for private health insurance could be around $13,884, making it the highest in the country. This substantial cost is influenced by various factors, including the price of medical services and the state’s small population base.

Tax Landscape in Vermont

Vermont’s tax structure significantly influences the overall cost of living. Property taxes are a considerable expense for homeowners, ranking among the highest in the country. The effective property tax rate typically falls between 1.56% and 1.83% of a property’s assessed value. These taxes are primarily levied at the municipal level to fund local services and education.

The state implements a progressive income tax system with rates ranging from 0% to 8.75% for the 2024 tax year. Vermont’s top income tax rate of 8.75% is considered one of the highest across the United States. The specific tax bracket and applicable rate depend on an individual’s taxable income and filing status.

Vermont’s state sales tax rate is 6%. Some municipalities levy an optional 1% local sales tax, resulting in a combined rate of up to 7%. This tax applies to the sale of tangible personal property, certain services, and amusement charges.

Other levies contribute to the cost of living. Vermont imposes a gasoline tax of 32.61 cents per gallon. Vehicle registration fees are $91 for one year or $167 for two years. Beginning January 1, 2025, new fees will be implemented for electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) to offset lost gas tax revenue, with EVs incurring an extra $89 and PHEVs an additional $44.50.

Vermont’s Cost Relative to Other States

Vermont’s overall cost of living is 0.8% higher than the national average. While this indicates a slightly elevated expense level compared to the broader United States, it remains more affordable than some other states in the Northeast region. Inflation in Vermont since January 2021 has seen prices increase by 17% to 17.8%, which is below the national average increase of 20.2% to 20.6%.

Vermont presents a mixed financial picture across expense categories. Housing costs are generally on par with or slightly below national averages. Utility expenses are consistently higher than the national average, driven by heating needs.

Groceries are a high financial burden, with residents spending 40% more than the national average. Transportation costs, particularly car insurance premiums, are among the lowest in the nation. Healthcare costs are significantly higher than national benchmarks, with premiums often exceeding twice the national average.

Geographic Variations in Vermont’s Living Costs

The cost of living within Vermont varies by geographic location. Urban centers and popular tourist destinations exhibit higher expenses compared to more rural areas. Burlington, the state’s most populous city, has a cost of living 12.4% higher than the state average and 11.5% higher than the U.S. average. Its median home price is $509,500.

In contrast, cities like Rutland offer a more affordable living experience, with its cost of living 9.9% lower than the U.S. average and 10.6% lower than the state average. Other rural towns, such as St. Johnsbury and Barre, also provide more economical housing options. These regional discrepancies are influenced by factors like population density, local job markets, and the availability of services, including healthcare and public transportation. Individual experiences can diverge based on where one chooses to reside within the state.