Bill > S0017

This bill proposes to exempt U.S. military retirement income and military survivor benefit income from Vermont state income tax, effectively removing these types of income from taxation. Specifically, the bill amends existing tax law to add military retirement and survivor benefit income as a deduction from federal adjusted gross income for Vermont state tax purposes. The bill will apply retroactively to taxable years on and after January 1, 2026, meaning military retirees and surviving spouses or dependents of deceased service members will be able to exclude this income from their Vermont state tax calculations starting with the 2026 tax year. The legislation also modifies provisions related to retirement income exclusions, removing specific language about military retirement income and adjusting the rules for electing retirement income exclusions. By providing this tax exemption, the bill aims to offer financial relief and recognition to military veterans and their families by reducing their state tax burden.