Vermont 2025-2026 Regular Session

Vermont House Bill H0135 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	BILL AS INTRODUCED H.135
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5	5	VT LEG #379736 v.1
6	6	H.135 1
7	7	Introduced by Representative Canfield of Fair Haven 2
8	8	Referred to Committee on 3
9	9	Date: 4
10	10	Subject: Taxation; income tax; income tax credits; tobacco products tax; 5
11	11	property tax hearing officers; flood abatement 6
12	12	Statement of purpose of bill as introduced: This bill proposes to make several 7
13	13	technical and policy changes to Vermont tax laws, including the annual link up 8
14	14	to federal income tax laws, requiring a joint income tax return when taxpayers 9
15	15	file jointly at the federal level, changing some definitions used for the tobacco 10
16	16	products tax, and increasing the pay for property tax hearing officers. The bill 11
17	17	also extends reimbursement to municipalities of State education property taxes 12
18	18	that were abated due to flooding. 13
19	19	An act relating to administrative and policy changes to Vermont tax laws 14
20	20	and extending reimbursement to municipalities for tax abatement due to 15
21	21	flooding 16
22	22	It is hereby enacted by the General Assembly of the State of Vermont: 17
23	23	* * * Personal Income Tax * * * 18 BILL AS INTRODUCED H.135
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28	28	Sec. 1. 32 V.S.A. § 5824 is amended to read: 1
29	29	§ 5824. ADOPTION OF FEDERAL INCOME TAX LAWS 2
30	30	The statutes of the United States relating to the federal income tax, as in 3
31	31	effect on December 31, 2023 2024, but without regard to federal income tax 4
32	32	rates under 26 U.S.C. § 1, are hereby adopted for the purpose of computing the 5
33	33	tax liability under this chapter and shall continue in effect as adopted until 6
34	34	amended, repealed, or replaced by act of the General Assembly. 7
35	35	Sec. 2. 32 V.S.A. § 7402 is amended to read: 8
36	36	§ 7402. DEFINITIONS 9
37	37	As used in this chapter unless the context requires otherwise: 10
38	38	* * * 11
39	39	(8) “Laws of the United States” means the U.S. Internal Revenue Code 12
40	40	of 1986, as amended through December 31, 2023 2024. As used in this 13
41	41	chapter, “Internal Revenue Code” has the same meaning as “laws of the United 14
42	42	States” as defined in this subdivision. The date through which amendments to 15
43	43	the U.S. Internal Revenue Code of 1986 are adopted under this subdivision 16
44	44	shall continue in effect until amended, repealed, or replaced by act of the 17
45	45	General Assembly. 18
46	46	* * * 19 BILL AS INTRODUCED H.135
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51	51	Sec. 3. 32 V.S.A. § 5861(c) is amended to read: 1
52	52	(c) Spouses or a surviving spouse may shall file a joint Vermont personal 2
53	53	income tax return for any taxable year for which the spouses file or the 3
54	54	surviving spouse are permitted to file files a joint federal income tax return 4
55	55	under the laws of the United States, unless the Commissioner allows a different 5
56	56	filing status. 6
57	57	Sec. 4. 32 V.S.A. § 5830f is amended to read: 7
58	58	§ 5830f. VERMONT CHILD TAX CREDIT 8
59	59	(a) A resident individual or part-year resident individual who is entitled to a 9
60	60	child tax credit under the laws of the United States or who would have been 10
61	61	entitled to a child tax credit under the laws of the United States but for the fact 11
62	62	that the individual or the individual’s spouse does not have a taxpayer 12
63	63	identification number shall be entitled to a refundable credit against the tax 13
64	64	imposed by section 5822 of this title for the taxable year. The total credit per 14
65	65	taxable year shall be in the amount of $1,000.00 per qualifying child, as 15
66	66	defined under 26 U.S.C. § 152(c) but notwithstanding the taxpayer 16
67	67	identification number requirements under 26 U.S.C. § 24(e) and (h)(7), who is 17
68	68	five six years of age or younger as of the close of the calendar year in which 18
69	69	the taxable year of the taxpayer begins. For a part-year resident individual, the 19
70	70	amount of the credit shall be multiplied by the percentage that the individual’s 20 BILL AS INTRODUCED H.135
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75	75	income that is earned or received during the period of the individual’s 1
76	76	residency in this State bears to the individual’s total income. 2
77	77	* * * 3
78	78	Sec. 5. 32 V.S.A. § 5828b is amended to read: 4
79	79	§ 5828b. EARNED INCOME TAX CREDIT 5
80	80	(a) A resident individual or part-year resident individual who is entitled to 6
81	81	an earned income tax credit granted under the laws of the United States or who 7
82	82	would have been entitled to an earned income tax credit under the laws of the 8
83	83	United States but for the fact that the individual, the individual’s spouse, or one 9
84	84	or more of the individual’s children does not have a qualifying taxpayer 10
85	85	identification number shall be entitled to a credit against the tax imposed for 11
86	86	each year by section 5822 of this title. The credit shall be for an individual 12
87	87	who claims one or more qualifying children 38 percent or for an individual 13
88	88	who does not claim one or more qualifying children 100 percent of the earned 14
89	89	income tax credit granted to the individual under the laws of the United States 15
90	90	or that would have been granted to the individual under the laws of the United 16
91	91	States but for the fact that the individual, the individual’s spouse, or one or 17
92	92	more of the individual’s children does not have a qualifying taxpayer 18
93	93	identification number, multiplied by the percentage that the individual’s 19
94	94	income that is earned or received during the period of the individual’s 20
95	95	residency in this State bears to the individual’s total income. A resident 21 BILL AS INTRODUCED H.135
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98	98
99	99	VT LEG #379736 v.1
100	100	individual or part-year resident individual who would have been entitled to or 1
101	101	granted an earned income tax credit under the laws of the United States but for 2
102	102	the fact that the individual, the individual’s spouse, or one or more of the 3
103	103	individual’s children does not have a qualifying taxpayer identification number 4
104	104	shall be entitled to a credit under this section. 5
105	105	* * * 6
106	106	Sec. 6. 32 V.S.A. § 5811(21) is amended to read: 7
107	107	(21) “Taxable income” means, in the case of an individual, federal 8
108	108	adjusted gross income determined without regard to 26 U.S.C. § 168(k) and: 9
109	109	* * * 10
110	110	(B) decreased by the following items of income (to the extent such 11
111	111	income is included in federal adjusted gross income): 12
112	112	* * * 13
113	113	(v) the amount of any federal deduction or credit that the taxpayer 14
114	114	would have been allowed for the cultivation, testing, processing, or sale of 15
115	115	cannabis or cannabis products as authorized under 7 V.S.A. chapter 33 or 37, 16
116	116	but for 26 U.S.C. § 280E; and 17
117	117	* * * 18
118	118	(vii) U.S. military retirement income and U.S. military survivor 19
119	119	benefit income received by the surviving spouse or dependent of the deceased 20
120	120	service member; and 21 BILL AS INTRODUCED H.135
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125	125	* * * 1
126	126	Sec. 7. 32 V.S.A. § 5830e is amended to read: 2
127	127	§ 5830e. RETIREMENT INCOME; SOCIAL SECURITY INCOME 3
128	128	(a) Social Security income. The portion of federally taxable Social 4
129	129	Security benefits excluded from taxable income under subdivision 5
130	130	5811(21)(B)(iv) of this chapter shall be as follows: 6
131	131	(1) For taxpayers whose filing status is single, married filing separately, 7
132	132	head of household, or surviving spouse: 8
133	133	(A) If the federal adjusted gross income of the taxpayer is less than or 9
134	134	equal to $50,000.00 $55,000.00, all federally taxable benefits received under 10
135	135	the federal Social Security Act shall be excluded. 11
136	136	(B) If the federal adjusted gross income of the taxpayer is greater than 12
137	137	$50,000.00 $55,000.00 but less than $60,000.00 $65,000.00, the percentage of 13
138	138	federally taxable benefits received under the Social Security Act to be 14
139	139	excluded shall be proportional to the amount of the taxpayer’s federal adjusted 15
140	140	gross income over $50,000.00 $55,000.00, determined by: 16
141	141	(i) subtracting the federal adjusted gross income of the taxpayer 17
142	142	from $60,000.00 $65,000.00; 18
143	143	(ii) dividing the value under subdivision (i) of this subdivision (B) 19
144	144	by $10,000.00; and 20 BILL AS INTRODUCED H.135
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147	147
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149	149	(iii) multiplying the value under subdivision (ii) of this subdivision 1
150	150	(B) by the federally taxable benefits received under the Social Security Act. 2
151	151	(C) If the federal adjusted gross income of the taxpayer is equal to or 3
152	152	greater than $60,000.00 $65,000.00, no amount of the federally taxable 4
153	153	benefits received under the Social Security Act shall be excluded under this 5
154	154	section. 6
155	155	(2) For taxpayers whose filing status is married filing jointly: 7
156	156	(A) If the federal adjusted gross income of the taxpayer is less than or 8
157	157	equal to $65,000.00 $70,000.00, all federally taxable benefits received under 9
158	158	the Social Security Act shall be excluded. 10
159	159	(B) If the federal adjusted gross income of the taxpayer is greater than 11
160	160	$65,000.00 $70,000.00 but less than $75,000.00 $80,000.00, the percentage of 12
161	161	federally taxable benefits received under the Social Security Act to be 13
162	162	excluded shall be proportional to the amount of the taxpayer’s federal adjusted 14
163	163	gross income over $65,000.00 $70,000.00, determined by: 15
164	164	(i) subtracting the federal adjusted gross income of the taxpayer 16
165	165	from $75,000.00 $80,000.00; 17
166	166	(ii) dividing the value under subdivision (i) of this subdivision (B) 18
167	167	by $10,000.00; and 19
168	168	(iii) multiplying the value under subdivision (ii) of this subdivision 20
169	169	(B) by the federally taxable benefits received under the Social Security Act. 21 BILL AS INTRODUCED H.135
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174	174	(C) If the federal adjusted gross income of the taxpayer is equal to or 1
175	175	greater than $75,000.00 $80,000.00, no amount of the federally taxable 2
176	176	benefits received under the Social Security Act shall be excluded under this 3
177	177	section. 4
178	178	(b) Civil Service Retirement System income. The portion of income 5
179	179	received from the Civil Service Retirement System excluded from taxable 6
180	180	income under subdivision 5811(21)(B)(iv) of this title shall be subject to the 7
181	181	limitations under subsection (e) of this section and shall be determined as 8
182	182	follows: 9
183	183	(1) For taxpayers whose filing status is single, married filing separately, 10
184	184	head of household, or surviving spouse: 11
185	185	(A) If the federal adjusted gross income of the taxpayer is less than or 12
186	186	equal to $50,000.00 $55,000.00, the first $10,000.00 of income received from 13
187	187	the Civil Service Retirement System shall be excluded. 14
188	188	(B) If the federal adjusted gross income of the taxpayer is greater than 15
189	189	$50,000.00 $55,000.00 but less than $60,000.00 $65,000.00, the percentage of 16
190	190	the first $10,000.00 of income received from the Civil Service Retirement 17
191	191	System to be excluded shall be proportional to the amount of the taxpayer’s 18
192	192	federal adjusted gross income over $50,000.00 $55,000.00, determined by: 19
193	193	(i) subtracting the federal adjusted gross income of the taxpayer 20
194	194	from $60,000.00 $65,000.00; 21 BILL AS INTRODUCED H.135
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199	199	(ii) dividing the value under subdivision (i) of this subdivision (B) 1
200	200	by $10,000.00; and 2
201	201	(iii) multiplying the value under subdivision (ii) of this subdivision 3
202	202	(B) by the first $10,000.00 of income received from the Civil Service 4
203	203	Retirement System. 5
204	204	(C) If the federal adjusted gross income of the taxpayer is equal to or 6
205	205	greater than $60,000.00 $65,000.00, no amount of the income received from 7
206	206	the Civil Service Retirement System shall be excluded under this section. 8
207	207	(2) For taxpayers whose filing status is married filing jointly: 9
208	208	(A) If the federal adjusted gross income of the taxpayer is less than or 10
209	209	equal to $65,000.00 $70,000.00, the first $10,000.00 of income received from 11
210	210	the Civil Service Retirement System shall be excluded. 12
211	211	(B) If the federal adjusted gross income of the taxpayer is greater than 13
212	212	$65,000.00 $70,000.00 but less than $75,000.00 $80,000.00, the percentage of 14
213	213	the first $10,000.00 of income received from the Civil Service Retirement 15
214	214	System to be excluded shall be proportional to the amount of the taxpayer’s 16
215	215	federal adjusted gross income over $65,000.00 $70,000.00, determined by: 17
216	216	(i) subtracting the federal adjusted gross income of the taxpayer 18
217	217	from $75,000.00 $80,000.00; 19
218	218	(ii) dividing the value under subdivision (i) of this subdivision (B) 20
219	219	by $10,000.00; and 21 BILL AS INTRODUCED H.135
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223	223	VT LEG #379736 v.1
224	224	(iii) multiplying the value under subdivision (ii) of this subdivision 1
225	225	(B) by the first $10,000.00 of income received from the Civil Service 2
226	226	Retirement System. 3
227	227	(C) If the federal adjusted gross income of the taxpayer is equal to or 4
228	228	greater than $75,000.00 $80,000.00, no amount of the income received from 5
229	229	the Civil Service Retirement System shall be excluded under this section. 6
230	230	(c) Other contributory retirement systems; earnings not covered by Social 7
231	231	Security. Other retirement income, except U.S. military retirement income 8
232	232	pursuant to subsection (d) of this section, received by a taxpayer of this State 9
233	233	shall be excluded pursuant to subsection (b) of this section as though the 10
234	234	income were received from the Civil Service Retirement System and shall be 11
235	235	subject to the limitations under subsection (e)(d) of this section, provided that: 12
236	236	* * * 13
237	237	(d) U.S. military retirement income. U.S. military retirement income 14
238	238	received by a taxpayer of this State shall be excluded pursuant to subsection 15
239	239	(b) of this section as though the income were received from the Civil Service 16
240	240	Retirement System and shall be subject to the limitations under subsection (e) 17
241	241	of this section. 18
242	242	(e) Requirement to elect one exclusion. A taxpayer of this State who is 19
243	243	eligible during the taxable year for the Social Security income exclusion under 20
244	244	subsection (a) of this section and any one or both of the exclusions under 21 BILL AS INTRODUCED H.135
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248	248	VT LEG #379736 v.1
249	249	subsections (b)–(d) and (c) of this section shall elect either one of the 1
250	250	exclusions for which the taxpayer is eligible under subsections (b)–(d) and (c) 2
251	251	of this section or the Social Security income exclusion under subsection (a) of 3
252	252	this section, but not both, for the taxable year. A taxpayer of this State who is 4
253	253	eligible during the taxable year for more than one of the both exclusions under 5
254	254	subsections (b)–(d) and (c) of this section shall elect only one of the exclusions 6
255	255	for which the taxpayer is eligible for the taxable year. 7
256	256	* * * Tobacco Products Tax * * * 8
257	257	Sec. 8. 32 V.S.A. § 7702 is amended to read: 9
258	258	§ 7702. DEFINITIONS 10
259	259	As used in this chapter unless the context otherwise requires: 11
260	260	* * * 12
261	261	(15) “Other tobacco products” means any product manufactured from, 13
262	262	derived from, or containing tobacco or nicotine, whether natural or synthetic, 14
263	263	that is intended for human consumption by smoking, chewing, or in any other 15
264	264	manner, including products sold as a tobacco substitute, as defined in 7 V.S.A. 16
265	265	§ 1001(8), and including any liquids, whether nicotine based or not, or delivery 17
266	266	devices sold separately for use with a tobacco substitute, but shall not include 18
267	267	cigarettes, little cigars, roll-your-own tobacco, snuff, new smokeless tobacco as 19
268	268	defined in this section, or cannabis products as defined in 7 V.S.A. § 831. 20
269	269	* * * 21 BILL AS INTRODUCED H.135
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274	274	(20) “New smokeless tobacco” means any tobacco product 1
275	275	manufactured from, derived from, or containing tobacco or nicotine, whether 2
276	276	natural or synthetic, that is not intended to be smoked, has a moisture content 3
277	277	of less than 45 percent, or is offered in individual single-dose tablets or other 4
278	278	discrete single-use units. 5
279	279	* * * 6
280	280	* * * Pay for Property Valuation Hearing Officers * * * 7
281	281	Sec. 9. 32 V.S.A. § 4465 is amended to read: 8
282	282	§ 4465. APPOINTMENT OF PROPERTY VALUATION HEARING 9
283	283	OFFICER; OATH; PAY 10
284	284	When an appeal to the Director is not withdrawn or forwarded by the 11
285	285	Director to Superior Court pursuant to subsection 4461(a) of this title, the 12
286	286	Director shall refer the appeal in writing to a person not employed by the 13
287	287	Director, appointed by the Director as hearing officer. The Director shall have 14
288	288	the right to remove a hearing officer for inefficiency, malfeasance in office, or 15
289	289	other cause. In like manner, the Director shall appoint a hearing officer to fill 16
290	290	any vacancy created by resignation, removal, or other cause. Before entering 17
291	291	into their duties, persons appointed as hearing officers shall take and subscribe 18
292	292	the oath of the office prescribed in the Constitution, which oath shall be filed 19
293	293	with the Director. The Director Commissioner of Taxes shall pay each hearing 20
294	294	officer a sum not to exceed $150.00 per diem for each day wherein hearings 21 BILL AS INTRODUCED H.135
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297	297
298	298	VT LEG #379736 v.1
299	299	are held $38.00 per hour plus a cost-of-living adjustment in an amount equal to 1
300	300	any adjustment approved for exempt employees by the Secretary of 2
301	301	Administration, together with reasonable expenses as the Director 3
302	302	Commissioner may determine. A hearing officer may subpoena witnesses, 4
303	303	records, and documents in the manner provided by law for serving subpoenas 5
304	304	in civil actions and may administer oaths to witnesses. 6
305	305	* * * Flooding Abatement Program * * * 7
306	306	Sec. 10. 2024 Acts and Resolves No. 82, Sec. 1, as amended by 2024 Acts and 8
307	307	Resolves No. 108, Sec. 3, is further amended to read: 9
308	308	Sec. 1. REIMBURSEMENT TO MUNICIPALITIES OF STATE 10
309	309	EDUCATION PROPERTY TAXES THAT WERE ABATED DUE 11
310	310	TO FLOODING 12
311	311	(a)(1) The Commissioner of Taxes may approve an application by a 13
312	312	municipality for reimbursement of State education property tax payments owed 14
313	313	under 32 V.S.A. § 5402(c) and 16 V.S.A. § 426. To be eligible for 15
314	314	reimbursement under this section, prior to November 15, 2024 2025, a 16
315	315	municipality must have abated, in proportion to the abated municipal tax, 17
316	316	under 24 V.S.A. § 1535 the State education property taxes that were assessed 18
317	317	on eligible property, after application of any property tax credit allowed under 19
318	318	32 V.S.A. chapter 154. 20 BILL AS INTRODUCED H.135
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323	323	(2) As used in this subsection, “eligible property” means property lost 1
324	324	or destroyed due directly or indirectly to severe storms and flooding in an area 2
325	325	that was declared a federal disaster between July 1, 2023 and October 15, 2023 3
326	326	December 31, 2024, provided the loss or destruction resulted in one or more of 4
327	327	the following: 5
328	328	(A) a 50 percent or greater loss in value to the primary structure on 6
329	329	the property; 7
330	330	(B) loss of use by the property owner of the primary structure on the 8
331	331	property for 60 days or more; 9
332	332	(C) loss of access by the property owner to utilities for the primary 10
333	333	structure on the property for 60 days or more; or 11
334	334	(D) condemnation of the primary structure on the property under 12
335	335	federal, State, or municipal law, as applicable. 13
336	336	(b) If a municipality demonstrates that, due to disruption to tax collections 14
337	337	resulting from flooding in an area that was declared a federal disaster between 15
338	338	July 1, 2023 and October 15, 2023 December 31, 2024, the municipality 16
339	339	incurred unanticipated interest expenses on funds borrowed to make State 17
340	340	education property tax payments owed under 32 V.S.A. § 5402(c) and 16 18
341	341	V.S.A. § 426, the municipality may be reimbursed by an amount equal to its 19
342	342	reasonable interest expenses under this subsection, provided the amount of 20
343	343	reimbursed interest expenses shall not exceed eight percent. 21 BILL AS INTRODUCED H.135
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346	346
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348	348	* * * 1
349	349	* * * Property Tax Credit Late Fee * * * 2
350	350	Sec. 11. 32 V.S.A. § 5402(c)(2) is amended to read: 3
351	351	(2) The Secretary of Education shall determine each municipality’s net 4
352	352	nonhomestead education tax payment and its net homestead education tax 5
353	353	payment to the State based on grand list information received by the Secretary 6
354	354	not later than the March 15 prior to the June 1 net payment. Payment shall be 7
355	355	accompanied by a return prescribed by the Secretary of Education. Each 8
356	356	municipality may retain 0.225 of one percent of the total education tax 9
357	357	collected, only upon timely remittance of net payment to the State Treasurer or 10
358	358	to the applicable school district or districts. Each municipality may also retain 11
359	359	$15.00 for each late property tax credit claim filed after April 15 and before 12
360	360	September 2, as notified by the Department of Taxes, for the cost of issuing a 13
361	361	new property tax bill. 14
362	362	* * * Downtown and Village Center Tax Credit * * * 15
363	363	Sec. 12. 32 V.S.A. § 5930ee is amended to read: 16
364	364	§ 5930ee. LIMITATIONS 17
365	365	Beginning in fiscal year 2010 and thereafter, the State Board may award tax 18
366	366	credits to all qualified applicants under this subchapter, provided that: 19 BILL AS INTRODUCED H.135
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368	368
369	369
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371	371	(1) the total amount of tax credits awarded annually, together with sales 1
372	372	tax reallocated under section 9819 of this title, does not exceed $3,000,000.00 2
373	373	$5,000,000.00; 3
374	374	* * * 4
375	375	* * * Effective Dates * * * 5
376	376	Sec. 13. EFFECTIVE DATES 6
377	377	This act shall take effect on passage except: 7
378	378	(1) notwithstanding 1 V.S.A. § 214, Secs. 1 and 2 (annual conformity to 8
379	379	federal tax laws) shall take effect retroactively on January 1, 2025 and shall 9
380	380	apply to taxable years beginning on and after January 1, 2024; 10
381	381	(2) notwithstanding 1 V.S.A. § 214, Sec. 3 (personal income tax filings, 11
382	382	credits, and exemptions) shall take effect retroactively on January 1, 2025 and 12
383	383	shall apply to taxable years beginning on and after January 1, 2025; 13
384	384	(3) Sec. 9 (pay for property valuation hearing officers) shall take effect 14
385	385	on July 1, 2025; and 15
386	386	(4) notwithstanding 1 V.S.A. § 214, Sec. 10 (flooding abatement 16
387	387	reimbursement program) shall take effect retroactively on November 15, 2024. 17