SCHEDULE FIT-166 Instructions

 Vermont Income Adjustments and Tax Computations for Fiduciaries
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                            LINE-BY-LINE INSTRUCTIONS
PART I   Taxable Municipal Bond Income

         Interest and dividend income from non-Vermont state and local obligations are taxable in 
         Vermont.  A Vermont obligation is one from the State of Vermont or Vermont municipality.

Line 1   Enter the total interest and dividend income received from all state and local obligations exempted 
         from federal tax.  You may not reduce interest and dividend income by investment expenses if those      INSTR  (Place at FIRST page)
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         expenses are not used to reduce income on your federal return.

Line 2   Enter the interest and dividend income from Vermont obligations.  This may have been paid directly 
         or through a mutual fund or other legal entity that invests in Vermont state and local obligations.  If 
         the income is received from a mutual fund that has only a portion of its assets invested in Vermont 
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         state and local obligations, enter only the Vermont obligation amount.

Line 3   Line 1 minus Line 2.  Enter result here and also on Form FIT-161, 2023 Fiduciary Return of Income, 
         Line 2a.  This is the amount of interest and dividend income from non-Vermont state and local 
         obligations that must be included in Vermont taxable income.

Line 4   Check this box if all municipal bond income was distributed and should not be taxed on this return.

PART II   Additions and Subtractions to Tax

Lines 1a and 1b 
         Complete these lines if the estate or trust is liable for tax on lump-sum distributions from federal 
         Form 4972, Tax on Lump-Sum Distributions; federal Form 5329, Additional Taxes on Qualified 
         Plans and Other Tax-Favored Accounts; or recapture of federal investment credit from federal 
         Form 4255, Recapture of Investment Credit.

Line 1c  Add Lines 1a and 1b and multiply the sum by 24%.

Line 2a  Investment tax credit from federal Form 3468, Investment Credit.  This credit is limited to the 
         amount of investment tax credit attributable to the Vermont-property portion.

Line 2b  Multiply Line 2a by 24%.

Line 2c  Vermont-Based Research and Development Credit carryforward.  Unused Vermont-based research 
         and development tax credit may be carried forward no more than five years following the year the 
         credit is claimed. 

Line 2d  Charitable Housing Credit. Charitable investments in housing in Vermont.

Line 2e  Add Lines 2b, 2c, and 2d. 
                                                                       2023 Schedule FIT-166 Instructions
                                                                                      Page 1 of 2
tax.vermont.gov                                                                       Rev. 10/23

PART III   Income Adjustment Calculation
Nonresident or part-year resident estates or trusts must complete Part III to determine the non-Vermont 
portion of income used in calculating the adjustment percentage on Form FIT-161, Line 10.

Lines 1 through 8                                                                                       Page 2
Enter in Column A all the items that are part of federal income as they appear on the federal 
Form 1041, U.S. Income Tax Return for Estates and Trusts.  This includes the net income reported 
on the Electing Small Business Trust portion of the federal Form 1041.  Enter in Column B the 
Vermont portion of all items listed in Column A.  

Nonresidents:  Use Line 8 to adjust Column A for non-Vermont state and local obligations and 
U.S. obligation interest.

Lines 3, 5, and 6
Use amount from federal Schedule K-1, Beneficiary’s Share of Income, Deductions, Credits, Etc., 
before recalculation for exclusion of bonus depreciation for both Column A and Column B.

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

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                                                       2023 Schedule FIT-166 Instructions
                                                                             Page 2 of 2
tax.vermont.gov                                                              Rev. 10/23