I live in NY but now have a tenant in VT. When I do my taxes for 2010..do I pay NY or VT state taxes on that?

I know you file in the state you reside. There is a process for part year resident. If you live in NY you file in NY. Call the VT State Dept of Taxation on the other issue.

You file in both states. VT as a non-resident showing only the VT income. NY as a resident showing all income world-wide. If you paid any VT income tax, NY will give you a credit equal to the lesser of the VT tax paid or what NY would have collected on the income.

You pay NY because that is where you reside when you receive the income.