An act relating to the military retirement income tax exclusion

This bill (S 308) removes income-based limits for excluding U.S. military retirement and survivor benefit income from Vermont income tax. Currently, Vermont taxpayers with federal adjusted gross income (AGI) over $125,000 see partial or no exclusion, but this bill would fully exclude all such military retirement income regardless of income level. It affects Vermont residents receiving military retirement pay, changing the tax treatment from a tiered system to a flat exclusion. The change applies retroactively to tax years beginning January 1, 2026.