Vermont Runs on Small Firms: What the 2026 Data Shows

Few states depend on small businesses the way Vermont does. Firms with fewer than 500 employees provided 62.1% of the jobs at Vermont’s private employers in 2022, 157,959 positions in all. Only Montana and Wyoming came out higher, and the national figure was 45.9%. Counting every business, including owners who work alone, 81,949 of Vermont’s firms, 99.0%, are small.

That dependence is why the job-flow figures in the SBA Office of Advocacy’s new Vermont profile matter. Between March 2024 and March 2025, Vermont lost jobs on net, and small businesses accounted for all of the loss and then some. Below, where the losses fell, what a typical Vermont business looks like, who is lending to them, and the costs of running one in 2026, starting with two that were added only recently.

A Small-Business State Where Small Firms Shed the Jobs

Over those twelve months, 3,150 establishments opened in Vermont and 3,201 closed. Employment fell by a net 1,284 jobs. Establishments belonging to small businesses lost 1,817 on net, while larger employers added about 533. The year before, small businesses had added 1,533 of the state’s 1,596 net new jobs. Nationally, the same twelve months brought a gain of 636,626.

Payroll records for the full calendar year agree. Private employment averaged 254,712 in 2025, down 1,166, or 0.5%. In percentage terms that was the third-steepest drop among the 50 states; 12 states and the District of Columbia lost private jobs. Output kept growing anyway, by 1.4% after inflation, tied for 36th among the states and below the national 2.1%.

The losses were concentrated in a few places:

• Professional and technical services: down 1,095 jobs (6.1%), with architecture and engineering firms alone down 19.7%.
• Retail: down 511. Wholesale: down 353.
• Health care and social assistance went the other way, up 1,010, with nursing and residential care adding 450.
• Chittenden County, around Burlington, lost 652 private jobs, about 40% of the losses in counties that shrank. Lamoille, the only county where hotels and restaurants employ more people than any other sector, gained the most, 153.

Pay across the map is uneven: Chittenden’s private average was $76,545 in 2025, against $52,571 in Orleans County near the Canadian border. The state’s population, meanwhile, slipped by 1,858 to 644,663, the second-smallest of any state; deaths have outnumbered births every year since 2020.

Bed-and-Breakfasts, Maple and Milk: What a Vermont Business Looks Like

Four in five Vermont small businesses, 64,930 of 81,949, have no employees. Among those that do hire, the smallest carry unusual weight: companies under 20 employees account for 23.8% of the state’s employment, third-highest among the states, against 16.2% nationwide. Nearly two-thirds of Vermont businesses, 64.0%, are located in rural areas, nearly four times the national rate of 16.5% (2023 data on owner and location).

Comparing each industry’s share of Vermont jobs with its share nationally shows what sets the state apart. These are the most over-represented industries with a solid number of employers behind them:

One of Vermont’s signature products barely shows up in payroll data at all, because it is made mostly by farm owners rather than employees. According to USDA’s June 2026 crop report, Vermont produced 3,091,000 gallons of maple syrup in 2026, 52.6% of the United States total and 3.5 times as much as New York, the next-largest producer, from 8.2 million taps. The 2025 crop was worth $101.7 million.

Where the Loans Went: Builders and Innkeepers

SBA-guaranteed lending shows which small businesses were borrowing. In fiscal 2025, Vermont borrowers received 210 SBA 7(a) loans worth $60.3 million, the most since at least fiscal 2020. Construction firms took the largest number, 42, followed by restaurants and lodging with 24 and professional services with 23. Chittenden County accounted for 59 of the loans.

The SBA’s 504 program, which finances real estate and equipment, told a narrower story: 9 of its 19 Vermont loans in fiscal 2025, and $17.4 million of its $22.4 million, 77.8%, went to accommodation and food businesses. With so few loans, that is a snapshot of one year rather than a trend.

Lending then slowed. In the first three quarters of fiscal 2026, Vermont borrowers received 118 7(a) loans, 31.8% fewer than a year before at the same point; the national count fell by a similar 33.4%. Banks that report under the Community Reinvestment Act lent $127.8 million in 2024 to Vermont businesses with revenue of $1 million or less. New business applications kept rising regardless: a record 7,575 in 2025, and 17.3% more through August 2026 than at the same point of 2025.

A Payroll Tax for Child Care, and a Local Sales Tax That Keeps Spreading

Two costs are recent additions. Since July 2024, the Child Care Contribution has taken 0.44% of wages paid in Vermont, of which employers may withhold up to 0.11% from employees, and 0.11% of net self-employment income, so sole proprietors pay it too. And a 1% local option sales tax, on top of the 6% state rate, now applies in 36 towns, 8 of which started on July 1, 2026.

The rest of the 2026 picture:

• Forming an LLC: $155 for articles of organization. Vermont law also allows low-profit LLCs (L3Cs), blockchain-based LLCs, benefit corporations and worker cooperative corporations.
• Annual report: $45 for a Vermont LLC ($170 for an out-of-state LLC), due within three months after the fiscal year ends, which means March 31 for a calendar-year company.
• Business entity tax: LLCs taxed as partnerships or S corporations generally owe a $250 minimum.
• Corporate income tax: 6.0%, 7.0% and 8.5% brackets, with a minimum set by Vermont gross receipts: $100 under $500,000, rising to $100,000 above $300 million.
• Personal income tax: 3.35% to 8.75% under the 2025 schedule; the 2026 schedule has not been posted.
• Meals and rooms: 9%, and 10% on alcoholic drinks, plus 1% where the local option applies.
• Minimum wage: $14.42 an hour since January 1, 2026, and $7.21 for tipped service employees. It is adjusted every year.

The steps to file are in starting a Vermont LLC, and owners who want their arrangements in writing can use a Vermont operating agreement template.

Four Things to Know Before Starting Up in Vermont

Sources

• Vermont’s 2026 small business profile from the SBA Office of Advocacy, read against the 2025 edition for the earlier job-flow year.
• Census Bureau: Statistics of U.S. Businesses for 2022 (state ranking by small-business share and firm size), Vintage 2025 population estimates, business applications through August 2026.
• Bureau of Labor Statistics: 2025 annual payroll averages (QCEW) for the state, its 14 counties and the location quotients.
• Bureau of Economic Analysis: real GDP by state, April 2026 release. USDA National Agricultural Statistics Service: Crop Production, June 2026.
• SBA 7(a) and 504 loan approvals through June 30, 2026, and FFIEC Community Reinvestment Act data as reported in the SBA profile.
• State of Vermont: the Secretary of State’s fee schedule and annual report rules, the Department of Taxes (entity, corporate, personal, sales, meals and rooms, local option and child care contribution), and the Department of Labor (minimum wage).