Budget & Taxes (Property Tax)

H.135 updates Vermont's tax laws to align with federal income tax rules as of December 31, 2024, requiring joint state tax filings for couples who file jointly at the federal level. It adjusts the state's child and earned income tax credits to match federal rules, removing identification number requirements for some claimants. The bill also increases pay for property tax hearing officers and extends state reimbursement to municipalities for education property taxes reduced due to flooding. These changes directly affect Vermont taxpayers, families claiming credits, and flood-impacted municipalities.

Vermont's S.104 would replace the current education property tax with an income-based education tax starting in 2027, eventually applying to all residents (homeowners and renters) by 2030. The bill eliminates the homestead property tax but keeps nonhomestead tax on non-residential property, while creating new renter credits against the income tax and adjusting property tax credits to provide broader relief for lower-income households. It also establishes a new top income tax rate to offset revenue losses from these credit changes. The bill is currently in the Finance Committee after its first reading on February 28, 2025.

H 378 establishes a new program allowing Vermont municipalities to use tax increment financing (TIF) to fund housing infrastructure projects. It enables cities and towns to leverage future increases in property tax revenue - specifically from education and municipal property taxes - to finance infrastructure like utilities, brownfield cleanup, and transportation improvements that stimulate new housing development. Municipalities must create a housing infrastructure project plan, hold public hearings, and get approval from the Vermont Economic Progress Council before using TIF funds. The bill directly affects local governments seeking to finance housing-related infrastructure without increasing tax rates, with funds restricted to approved projects and related costs.