SCHEDULE FIT-162 Instructions    

                      Vermont Capital Gains Exclusions for Estates or Trusts
                                                                                                                                 Page 1

                                             INSTRUCTIONS

Vermont allows a portion of net adjusted capital gains, as defined by Internal Revenue Code 26 U.S.C. §1(h), to be excluded 
from Vermont taxable income. Qualified dividends are not eligible for capital gains treatment for Vermont tax purposes.  
Taxpayers may elect either the Flat Exclusion or the Percentage Exclusion.  The amount excluded under either method 
cannot exceed 40% of federal taxable income. 

Important note for capital loss:  If your federal Form 1041, U.S. Income Tax Return for Estates and Trusts shows a capital 
loss, you are not eligible to complete this form. No Vermont exclusion is available when a net capital loss is reported, even 
if the sale of farm or standing timber resulted in a capital gain.

Part I  Flat Exclusion
The general exclusion amount for the tax year is $5,000 or the actual amount of net adjusted capital gains, whichever is less.

Special instructions for Line 1                                                                                                  INSTR  (Place at FIRST page)
If you do not file federal Form 1041, Schedule D, Capital Gains and Losses, enter the amount from federal Form 1041,             Instr. pages 
Line 4, onto Form FIT-162, Line 1.

Part II  Percentage Exclusion   
Taxpayers may choose to exclude 40% of their adjusted net capital gain from the sale of assets held for more than three 
years.  Only certain categories of capital gain income are eligible for this exclusion.  Effective July 1, 2019, the 40% capital 1 - 1
gains exclusion for certain types of capital gain is limited to $350,000.  This means the benefit of this exclusion phases out 
at capital gains of $875,000.
Capital Gains from the sale of the following assets are NOT eligible for exclusion under the percentage method even if they 
have been held for more than three years:
1. Real estate or a portion of real estate used as a taxpayer’s primary or nonprimary home
2. Depreciable personal property (except for farm or standing timber)
3. Stocks or bonds which are publicly traded or traded on an exchange
4. Any other financial instruments which are publicly traded or traded on an exchange

Part III Capital Gain Exclusion Amount 
This part applies the limitation of 40% of federal taxable income and calculates your capital gain exclusion.  Enter the 
amount from Part III, Line 21, onto Form FIT-161, Line 4b. 

                                  Contacting the Department

   Mailing address: 
                                                                  Telephone:      (866) 828-2865 (toll-free in Vermont)          INSTR  (Place at LAST page)
   Vermont Department of Taxes                                    Telephone:      (802) 828-6820 (local and out-of-state)        Instr. pages 
   PO Box 1700                                                    Fax:            (802) 828-2720
   Montpelier, VT  05601-1700                                     Email Address:  tax.estate@vermont.gov

                                                                                                                                 1 - 1

                                                                                  2023 Schedule FIT-162 Instructions
                                                                                                        Page 1 of 1
tax.vermont.gov                                                                                         Rev. 10/23