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You will have to file a non-resident VT tax return, paying VT tax on the VT income. You will also include that income on your NY tax return and pay NY tax on it. But, NY will give you a credit for the VT tax paid.
So, you should not need to withhold any NY tax on the VT income. You may owe a little NY tax, as the NY rate is slightly more than VT.
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