Toast Payroll: Vermont Child Care Tax

On July 1st, 2024, Vermont will begin collecting payroll taxes for a child care initiative called the Child Care Contribution special fund. This tax will be automatically withheld from applicable employees at rate of .11% and applicable employers at a rate of .33%.

This change requires no action on your part. The tax is applied to payrolls whose check date is after July 1st. You can review the amounts by reading the Payroll Summary report. You'll also see the amounts reflected in the Estimated Withdrawal tile of the Review and Submit step of payroll.

Some items of note:

• Reporting and filing for this tax is included with withholding filing. Additionally, this tax follows the same payment frequency of the Vermont state income withholding (SIT) tax.
  • For these reasons, this tax will not appear on the Tax Account page since all the EIN information is the same as Vermont SIT.
• There is no cap on the withholding amount.
• If an employer would like to assume the entire .44% rate (the employer rate of .33% and the employee rate of .11%), they can opt into this on their own by navigating to Settings > Payroll > Tax Accounts, selecting the edit pencil for Vermont Child Care Contribution - Employer (State Withholding - VT), and making your selection in the checkboxes at the bottom before selecting Save.

This content is for informational purposes and is not intended as legal, tax, HR, or any other professional advice. Please contact an attorney or other professional for advice.