summary
Introduced
02/11/2025
02/11/2025
In Committee
02/11/2025
02/11/2025
Crossed Over
Passed
Dead
Introduced Session
2025-2026 Session
Bill Summary
This bill proposes to transition from an education property tax to an education income tax in fiscal year 2027. This bill would create an education tax that is based on the income of all Vermont residents (both homeowners and renters) with a rate determined by locally voted budgets. This bill would eliminate the homestead education property tax and levy the nonhomestead education property tax on all property except residential dwellings and the two-acre parcel surrounding the dwellings. This bill would continue to provide the existing renter credit. This bill also proposes to update the property tax credit income sensitivity measures to provide relief to a broader class of Vermont taxpayers in fiscal year 2026.
AI Summary
This bill introduces a new education income tax in Vermont, establishing a progressive tax structure with different rates for various filing statuses (married filing jointly, heads of household, unmarried individuals, and married filing separately). The tax rates range from 3.35% to 8.75%, depending on income levels, and are adjusted annually for inflation. A key innovative feature is that the tax rates will be further customized for each school district based on their per-pupil education spending. The bill also redefines how Vermont income is calculated for residents and non-residents, including specific provisions for income derived from in-state sources. Additionally, the legislation includes a renter credit of 21% of gross rent paid, proportional to the individual's period of residency in the state. The bill eliminates the existing homestead property tax system and replaces it with this new education income tax approach, aiming to create a more equitable and flexible method of funding education. It modifies various existing tax laws, updates definitions, and makes consequential changes to how education funding will be collected and allocated. The new system is set to take full effect on July 1, 2026, with some preliminary adjustments beginning in July 2025.
Committee Categories
Budget and Finance
Sponsors (2)
Last Action
House Committee on Ways and Means Hearing (00:00:00 2/21/2025 ) (on 02/21/2025)
Official Document
bill text
bill summary
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bill summary
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bill summary
| Document Type | Source Location |
|---|---|
| State Bill Page | https://legislature.vermont.gov/bill/status/2026/H.177 |
| BillText | https://legislature.vermont.gov/Documents/2026/Docs/BILLS/H-0177/H-0177%20As%20Introduced.pdf |
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