Tax deadlines can feel like a sprint, especially for taxpayers navigating federal income tax returns and Vermont returns. Sometimes, a personal tax extension can save the day—offering you more time to file without risking penalties.

But here's the catch: While a tax extension gives you additional time to file, it doesn't give you more time to pay taxes. Payments are due by the original deadline, or you could face penalties and interest.

Let’s break down how Vermont tax extensions work, why they’re helpful, and how you can stay penalty-free.

What is a Tax Extension?

A tax extension is an official request for more time to complete your tax filing, whether for a federal income tax return or a Vermont return. It’s like hitting the pause button to ensure accuracy and avoid last-minute mistakes.

The Internal Revenue Service (IRS) and the Vermont Department of Taxes offer extensions for individual taxpayers and businesses, including S corporations. However, while filing gets a grace period, payments don’t. You'll still need to pay taxes by the original deadline.

Why File a Tax Extension?

Here are some solid reasons why taxpayers might choose to file a personal tax extension:

• Avoid Penalties: Filing an extension helps avoid late-filing penalties and interest.
• Extra Time for Accuracy: Need more time to gather tax documents? An extension lets you file accurately and avoid mistakes.
• Business Flexibility: Business owners can use extensions to organize complex finances.

Do I Need to File a Vermont Tax Extension?

It depends on your situation:

- If you filed a federal extension (Form 4868) and do NOT owe taxes:

→ Vermont automatically grants an extension

→ No state form is required

 - If you owe Vermont taxes:

→ You must file Form IN-151

→ And pay your tax liability by April 15

 - If you did NOT file a federal extension:

→ You must file Form IN-151 to request a state extension

 Your extension gives you until October 15 to file your return.

Vermont State Income Tax Extension

Form IN-151: Vermont Individual Income Tax Extension

When is Form IN-151 Required?

• If you are not filing a federal extension or need to make an extension payment to Vermont, you must file Form IN-151.
• It must be filed by the original due date, typically April 15th.
• Vermont generally grants a six-month extension, extending the filing deadline to October 15th.

Important Note: This extension does not apply to Form HS-122 (Vermont Homestead Declaration or Property Tax Credit Claim). Form HS-122 is still due by April 15th, and late filings may incur a penalty of up to 8% of the corrected education tax.

Federal Tax Extension

Don’t forget—filing a Vermont extension doesn’t automatically extend your federal income tax return. You’ll need to:

• Submit IRS Form 4868 for individual extensions.
• Submit IRS Form 7004 for business extensions.

Business Tax Return Extension

• Business owners must submit Form BA-403 for Vermont business tax extensions.
• This applies to C corporations, S corporations, partnerships, and sole proprietors.
• Extension deadlines vary by entity type.
• • Calendar-year C corporations follow the April 15 deadline.
  • S corporations and partnerships typically have a March 15 deadline.

Payment and Filing Deadlines

Due Date for Vermont State Income Tax

• The original deadline for Vermont tax returns is April 15th.
• If this date falls on a weekend or holiday, the next business day becomes the deadline.

Payment Deadlines

• Taxpayers must pay taxes owed by the original deadline, even if an extension is filed.
• Late payments may incur penalties and interest, so it's smart to pay any estimated taxes upfront.

How to File a Vermont Tax Extension

File Form IN-151 or BA-403

• Form IN-151: For individual income tax extensions.
• Form BA-403: For business income tax extensions.

How to File:

• Online through the Vermont Department of Taxes website.
• By Mail to the address below.
• Vermont Department of Taxes, PO Box 1881, Montpelier, VT 05601-1881

Penalties and Interest

Penalty for Late Filing

• $50 if the return is filed more than 60 days from the original due date, or the extended deadline if an extension was granted.

Penalty for Late Payment

• A 1% per month penalty applies to unpaid tax not settled by the original deadline.
• You can request a waiver if you have a valid reason for being late.

Interest on Late Payment

• Interest is charged on unpaid taxes.
• The rate changes each year. For the current annual rate, visit the Interest Rates page of the Vermont Department of Taxes.

Common Mistakes to Avoid When Filing a Vermont Tax Extension

Even seasoned taxpayers can slip up. Here are common mistakes to dodge:

1. Missing the Original Deadline: Extensions must be filed by April 15th (or the next business day).
2. Assuming More Time to Pay: An extension gives you more time to file, but taxes must still be paid by the original deadline.
3. Forgetting Federal Extensions: Filing a Vermont extension doesn’t automatically cover your federal income tax return.
4. Skipping Estimated Payments: Not paying estimated taxes can lead to penalties and interest.
5. Ignoring Record-Keeping: Always keep documentation of your extension and payments.

Penalty and Interest Calculation for Late Vermont Tax Payments

Assumptions for Example:

• Tax Amount Due: $5,000
• Penalty Rate: 1% per month
• Interest Rate: 8.5% annual interest (For 2025, calculated daily)
• Interest Formula: Interest=Tax Due × Interest Rate × (Days Late/365)

Compare Vermont Tax Extension Rules to Nearby States

If you live or work across state lines, you may also need to understand how nearby states handle tax extensions:

• New Hampshire tax extension
• New York state tax extension
• Massachusetts tax extension rules
• Maine tax extension
• Connecticut extension deadline

Each state has different rules for payment requirements and whether a separate extension form is required.

File Your Vermont Tax Extension Today

Avoid penalties and ensure your extension is handled correctly.

File quickly and stay compliant with Vermont tax rules.

Start your tax extension today!