Bill > S0104

This bill proposes a significant transformation of Vermont's education funding system by transitioning from a property tax-based model to an income-based education funding approach. The bill would gradually phase in an education income tax, replacing the current homestead and nonhomestead property taxes. Key provisions include: raising the income threshold for property tax credits from $47,000 to $60,000, creating a new education income tax with rates ranging from 2% to 8% depending on income level, and implementing a renter credit equivalent to 21% of gross rent paid. In fiscal year 2027, the system would shift from a property tax to an income-based education tax for homeowners, and by fiscal year 2030, the tax would apply to all Vermont residents, including renters. The bill also proposes to eliminate the homestead property tax and modify the nonhomestead property tax to apply only to non-residential properties. To offset potential revenue losses, the bill includes a one-year new top marginal tax rate and a provision to transfer 12.5% of revenue from the highest tax bracket to the Education Fund. The changes are designed to provide more equitable education funding by basing taxes more on ability to pay and less on property values.

Budget and Finance

https://legislature.vermont.gov/bill/status/2026/S.104