BILL AS INTRODUCED H.135
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H.135 1
Introduced by Representative Canfield of Fair Haven 2
Referred to Committee on 3
Date: 4
Subject: Taxation; income tax; income tax credits; tobacco products tax; 5
property tax hearing officers; flood abatement 6
Statement of purpose of bill as introduced: This bill proposes to make several 7
technical and policy changes to Vermont tax laws, including the annual link up 8
to federal income tax laws, requiring a joint income tax return when taxpayers 9
file jointly at the federal level, changing some definitions used for the tobacco 10
products tax, and increasing the pay for property tax hearing officers. The bill 11
also extends reimbursement to municipalities of State education property taxes 12
that were abated due to flooding. 13
An act relating to administrative and policy changes to Vermont tax laws 14
and extending reimbursement to municipalities for tax abatement due to 15
flooding 16
It is hereby enacted by the General Assembly of the State of Vermont: 17
* * * Personal Income Tax * * * 18 BILL AS INTRODUCED H.135
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Sec. 1. 32 V.S.A. § 5824 is amended to read: 1
§ 5824. ADOPTION OF FEDERAL INCOME TAX LAWS 2
The statutes of the United States relating to the federal income tax, as in 3
effect on December 31, 2023 2024, but without regard to federal income tax 4
rates under 26 U.S.C. § 1, are hereby adopted for the purpose of computing the 5
tax liability under this chapter and shall continue in effect as adopted until 6
amended, repealed, or replaced by act of the General Assembly. 7
Sec. 2. 32 V.S.A. § 7402 is amended to read: 8
§ 7402. DEFINITIONS 9
As used in this chapter unless the context requires otherwise: 10
* * * 11
(8) “Laws of the United States” means the U.S. Internal Revenue Code 12
of 1986, as amended through December 31, 2023 2024. As used in this 13
chapter, “Internal Revenue Code” has the same meaning as “laws of the United 14
States” as defined in this subdivision. The date through which amendments to 15
the U.S. Internal Revenue Code of 1986 are adopted under this subdivision 16
shall continue in effect until amended, repealed, or replaced by act of the 17
General Assembly. 18
* * * 19 BILL AS INTRODUCED H.135
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Sec. 3. 32 V.S.A. § 5861(c) is amended to read: 1
(c) Spouses or a surviving spouse may shall file a joint Vermont personal 2
income tax return for any taxable year for which the spouses file or the 3
surviving spouse are permitted to file files a joint federal income tax return 4
under the laws of the United States, unless the Commissioner allows a different 5
filing status. 6
Sec. 4. 32 V.S.A. § 5830f is amended to read: 7
§ 5830f. VERMONT CHILD TAX CREDIT 8
(a) A resident individual or part-year resident individual who is entitled to a 9
child tax credit under the laws of the United States or who would have been 10
entitled to a child tax credit under the laws of the United States but for the fact 11
that the individual or the individual’s spouse does not have a taxpayer 12
identification number shall be entitled to a refundable credit against the tax 13
imposed by section 5822 of this title for the taxable year. The total credit per 14
taxable year shall be in the amount of $1,000.00 per qualifying child, as 15
defined under 26 U.S.C. § 152(c) but notwithstanding the taxpayer 16
identification number requirements under 26 U.S.C. § 24(e) and (h)(7), who is 17
five six years of age or younger as of the close of the calendar year in which 18
the taxable year of the taxpayer begins. For a part-year resident individual, the 19
amount of the credit shall be multiplied by the percentage that the individual’s 20 BILL AS INTRODUCED H.135
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income that is earned or received during the period of the individual’s 1
residency in this State bears to the individual’s total income. 2
* * * 3
Sec. 5. 32 V.S.A. § 5828b is amended to read: 4
§ 5828b. EARNED INCOME TAX CREDIT 5
(a) A resident individual or part-year resident individual who is entitled to 6
an earned income tax credit granted under the laws of the United States or who 7
would have been entitled to an earned income tax credit under the laws of the 8
United States but for the fact that the individual, the individual’s spouse, or one 9
or more of the individual’s children does not have a qualifying taxpayer 10
identification number shall be entitled to a credit against the tax imposed for 11
each year by section 5822 of this title. The credit shall be for an individual 12
who claims one or more qualifying children 38 percent or for an individual 13
who does not claim one or more qualifying children 100 percent of the earned 14
income tax credit granted to the individual under the laws of the United States 15
or that would have been granted to the individual under the laws of the United 16
States but for the fact that the individual, the individual’s spouse, or one or 17
more of the individual’s children does not have a qualifying taxpayer 18
identification number, multiplied by the percentage that the individual’s 19
income that is earned or received during the period of the individual’s 20
residency in this State bears to the individual’s total income. A resident 21 BILL AS INTRODUCED H.135
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individual or part-year resident individual who would have been entitled to or 1
granted an earned income tax credit under the laws of the United States but for 2
the fact that the individual, the individual’s spouse, or one or more of the 3
individual’s children does not have a qualifying taxpayer identification number 4
shall be entitled to a credit under this section. 5
* * * 6
Sec. 6. 32 V.S.A. § 5811(21) is amended to read: 7
(21) “Taxable income” means, in the case of an individual, federal 8
adjusted gross income determined without regard to 26 U.S.C. § 168(k) and: 9
* * * 10
(B) decreased by the following items of income (to the extent such 11
income is included in federal adjusted gross income): 12
* * * 13
(v) the amount of any federal deduction or credit that the taxpayer 14
would have been allowed for the cultivation, testing, processing, or sale of 15
cannabis or cannabis products as authorized under 7 V.S.A. chapter 33 or 37, 16
but for 26 U.S.C. § 280E; and 17
* * * 18
(vii) U.S. military retirement income and U.S. military survivor 19
benefit income received by the surviving spouse or dependent of the deceased 20
service member; and 21 BILL AS INTRODUCED H.135
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* * * 1
Sec. 7. 32 V.S.A. § 5830e is amended to read: 2
§ 5830e. RETIREMENT INCOME; SOCIAL SECURITY INCOME 3
(a) Social Security income. The portion of federally taxable Social 4
Security benefits excluded from taxable income under subdivision 5
5811(21)(B)(iv) of this chapter shall be as follows: 6
(1) For taxpayers whose filing status is single, married filing separately, 7
head of household, or surviving spouse: 8
(A) If the federal adjusted gross income of the taxpayer is less than or 9
equal to $50,000.00 $55,000.00, all federally taxable benefits received under 10
the federal Social Security Act shall be excluded. 11
(B) If the federal adjusted gross income of the taxpayer is greater than 12
$50,000.00 $55,000.00 but less than $60,000.00 $65,000.00, the percentage of 13
federally taxable benefits received under the Social Security Act to be 14
excluded shall be proportional to the amount of the taxpayer’s federal adjusted 15
gross income over $50,000.00 $55,000.00, determined by: 16
(i) subtracting the federal adjusted gross income of the taxpayer 17
from $60,000.00 $65,000.00; 18
(ii) dividing the value under subdivision (i) of this subdivision (B) 19
by $10,000.00; and 20 BILL AS INTRODUCED H.135
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(iii) multiplying the value under subdivision (ii) of this subdivision 1
(B) by the federally taxable benefits received under the Social Security Act. 2
(C) If the federal adjusted gross income of the taxpayer is equal to or 3
greater than $60,000.00 $65,000.00, no amount of the federally taxable 4
benefits received under the Social Security Act shall be excluded under this 5
section. 6
(2) For taxpayers whose filing status is married filing jointly: 7
(A) If the federal adjusted gross income of the taxpayer is less than or 8
equal to $65,000.00 $70,000.00, all federally taxable benefits received under 9
the Social Security Act shall be excluded. 10
(B) If the federal adjusted gross income of the taxpayer is greater than 11
$65,000.00 $70,000.00 but less than $75,000.00 $80,000.00, the percentage of 12
federally taxable benefits received under the Social Security Act to be 13
excluded shall be proportional to the amount of the taxpayer’s federal adjusted 14
gross income over $65,000.00 $70,000.00, determined by: 15
(i) subtracting the federal adjusted gross income of the taxpayer 16
from $75,000.00 $80,000.00; 17
(ii) dividing the value under subdivision (i) of this subdivision (B) 18
by $10,000.00; and 19
(iii) multiplying the value under subdivision (ii) of this subdivision 20
(B) by the federally taxable benefits received under the Social Security Act. 21 BILL AS INTRODUCED H.135
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(C) If the federal adjusted gross income of the taxpayer is equal to or 1
greater than $75,000.00 $80,000.00, no amount of the federally taxable 2
benefits received under the Social Security Act shall be excluded under this 3
section. 4
(b) Civil Service Retirement System income. The portion of income 5
received from the Civil Service Retirement System excluded from taxable 6
income under subdivision 5811(21)(B)(iv) of this title shall be subject to the 7
limitations under subsection (e) of this section and shall be determined as 8
follows: 9
(1) For taxpayers whose filing status is single, married filing separately, 10
head of household, or surviving spouse: 11
(A) If the federal adjusted gross income of the taxpayer is less than or 12
equal to $50,000.00 $55,000.00, the first $10,000.00 of income received from 13
the Civil Service Retirement System shall be excluded. 14
(B) If the federal adjusted gross income of the taxpayer is greater than 15
$50,000.00 $55,000.00 but less than $60,000.00 $65,000.00, the percentage of 16
the first $10,000.00 of income received from the Civil Service Retirement 17
System to be excluded shall be proportional to the amount of the taxpayer’s 18
federal adjusted gross income over $50,000.00 $55,000.00, determined by: 19
(i) subtracting the federal adjusted gross income of the taxpayer 20
from $60,000.00 $65,000.00; 21 BILL AS INTRODUCED H.135
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(ii) dividing the value under subdivision (i) of this subdivision (B) 1
by $10,000.00; and 2
(iii) multiplying the value under subdivision (ii) of this subdivision 3
(B) by the first $10,000.00 of income received from the Civil Service 4
Retirement System. 5
(C) If the federal adjusted gross income of the taxpayer is equal to or 6
greater than $60,000.00 $65,000.00, no amount of the income received from 7
the Civil Service Retirement System shall be excluded under this section. 8
(2) For taxpayers whose filing status is married filing jointly: 9
(A) If the federal adjusted gross income of the taxpayer is less than or 10
equal to $65,000.00 $70,000.00, the first $10,000.00 of income received from 11
the Civil Service Retirement System shall be excluded. 12
(B) If the federal adjusted gross income of the taxpayer is greater than 13
$65,000.00 $70,000.00 but less than $75,000.00 $80,000.00, the percentage of 14
the first $10,000.00 of income received from the Civil Service Retirement 15
System to be excluded shall be proportional to the amount of the taxpayer’s 16
federal adjusted gross income over $65,000.00 $70,000.00, determined by: 17
(i) subtracting the federal adjusted gross income of the taxpayer 18
from $75,000.00 $80,000.00; 19
(ii) dividing the value under subdivision (i) of this subdivision (B) 20
by $10,000.00; and 21 BILL AS INTRODUCED H.135
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(iii) multiplying the value under subdivision (ii) of this subdivision 1
(B) by the first $10,000.00 of income received from the Civil Service 2
Retirement System. 3
(C) If the federal adjusted gross income of the taxpayer is equal to or 4
greater than $75,000.00 $80,000.00, no amount of the income received from 5
the Civil Service Retirement System shall be excluded under this section. 6
(c) Other contributory retirement systems; earnings not covered by Social 7
Security. Other retirement income, except U.S. military retirement income 8
pursuant to subsection (d) of this section, received by a taxpayer of this State 9
shall be excluded pursuant to subsection (b) of this section as though the 10
income were received from the Civil Service Retirement System and shall be 11
subject to the limitations under subsection (e)(d) of this section, provided that: 12
* * * 13
(d) U.S. military retirement income. U.S. military retirement income 14
received by a taxpayer of this State shall be excluded pursuant to subsection 15
(b) of this section as though the income were received from the Civil Service 16
Retirement System and shall be subject to the limitations under subsection (e) 17
of this section. 18
(e) Requirement to elect one exclusion. A taxpayer of this State who is 19
eligible during the taxable year for the Social Security income exclusion under 20
subsection (a) of this section and any one or both of the exclusions under 21 BILL AS INTRODUCED H.135
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subsections (b)–(d) and (c) of this section shall elect either one of the 1
exclusions for which the taxpayer is eligible under subsections (b)–(d) and (c) 2
of this section or the Social Security income exclusion under subsection (a) of 3
this section, but not both, for the taxable year. A taxpayer of this State who is 4
eligible during the taxable year for more than one of the both exclusions under 5
subsections (b)–(d) and (c) of this section shall elect only one of the exclusions 6
for which the taxpayer is eligible for the taxable year. 7
* * * Tobacco Products Tax * * * 8
Sec. 8. 32 V.S.A. § 7702 is amended to read: 9
§ 7702. DEFINITIONS 10
As used in this chapter unless the context otherwise requires: 11
* * * 12
(15) “Other tobacco products” means any product manufactured from, 13
derived from, or containing tobacco or nicotine, whether natural or synthetic, 14
that is intended for human consumption by smoking, chewing, or in any other 15
manner, including products sold as a tobacco substitute, as defined in 7 V.S.A. 16
§ 1001(8), and including any liquids, whether nicotine based or not, or delivery 17
devices sold separately for use with a tobacco substitute, but shall not include 18
cigarettes, little cigars, roll-your-own tobacco, snuff, new smokeless tobacco as 19
defined in this section, or cannabis products as defined in 7 V.S.A. § 831. 20
* * * 21 BILL AS INTRODUCED H.135
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(20) “New smokeless tobacco” means any tobacco product 1
manufactured from, derived from, or containing tobacco or nicotine, whether 2
natural or synthetic, that is not intended to be smoked, has a moisture content 3
of less than 45 percent, or is offered in individual single-dose tablets or other 4
discrete single-use units. 5
* * * 6
* * * Pay for Property Valuation Hearing Officers * * * 7
Sec. 9. 32 V.S.A. § 4465 is amended to read: 8
§ 4465. APPOINTMENT OF PROPERTY VALUATION HEARING 9
OFFICER; OATH; PAY 10
When an appeal to the Director is not withdrawn or forwarded by the 11
Director to Superior Court pursuant to subsection 4461(a) of this title, the 12
Director shall refer the appeal in writing to a person not employed by the 13
Director, appointed by the Director as hearing officer. The Director shall have 14
the right to remove a hearing officer for inefficiency, malfeasance in office, or 15
other cause. In like manner, the Director shall appoint a hearing officer to fill 16
any vacancy created by resignation, removal, or other cause. Before entering 17
into their duties, persons appointed as hearing officers shall take and subscribe 18
the oath of the office prescribed in the Constitution, which oath shall be filed 19
with the Director. The Director Commissioner of Taxes shall pay each hearing 20
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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are held $38.00 per hour plus a cost-of-living adjustment in an amount equal to 1
any adjustment approved for exempt employees by the Secretary of 2
Administration, together with reasonable expenses as the Director 3
Commissioner may determine. A hearing officer may subpoena witnesses, 4
records, and documents in the manner provided by law for serving subpoenas 5
in civil actions and may administer oaths to witnesses. 6
* * * Flooding Abatement Program * * * 7
Sec. 10. 2024 Acts and Resolves No. 82, Sec. 1, as amended by 2024 Acts and 8
Resolves No. 108, Sec. 3, is further amended to read: 9
Sec. 1. REIMBURSEMENT TO MUNICIPALITIES OF STATE 10
EDUCATION PROPERTY TAXES THAT WERE ABATED DUE 11
TO FLOODING 12
(a)(1) The Commissioner of Taxes may approve an application by a 13
municipality for reimbursement of State education property tax payments owed 14
under 32 V.S.A. § 5402(c) and 16 V.S.A. § 426. To be eligible for 15
reimbursement under this section, prior to November 15, 2024 2025, a 16
municipality must have abated, in proportion to the abated municipal tax, 17
under 24 V.S.A. § 1535 the State education property taxes that were assessed 18
on eligible property, after application of any property tax credit allowed under 19
32 V.S.A. chapter 154. 20 BILL AS INTRODUCED H.135
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(2) As used in this subsection, “eligible property” means property lost 1
or destroyed due directly or indirectly to severe storms and flooding in an area 2
that was declared a federal disaster between July 1, 2023 and October 15, 2023 3
December 31, 2024, provided the loss or destruction resulted in one or more of 4
the following: 5
(A) a 50 percent or greater loss in value to the primary structure on 6
the property; 7
(B) loss of use by the property owner of the primary structure on the 8
property for 60 days or more; 9
(C) loss of access by the property owner to utilities for the primary 10
structure on the property for 60 days or more; or 11
(D) condemnation of the primary structure on the property under 12
federal, State, or municipal law, as applicable. 13
(b) If a municipality demonstrates that, due to disruption to tax collections 14
resulting from flooding in an area that was declared a federal disaster between 15
July 1, 2023 and October 15, 2023 December 31, 2024, the municipality 16
incurred unanticipated interest expenses on funds borrowed to make State 17
education property tax payments owed under 32 V.S.A. § 5402(c) and 16 18
V.S.A. § 426, the municipality may be reimbursed by an amount equal to its 19
reasonable interest expenses under this subsection, provided the amount of 20
reimbursed interest expenses shall not exceed eight percent. 21 BILL AS INTRODUCED H.135
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* * * 1
* * * Property Tax Credit Late Fee * * * 2
Sec. 11. 32 V.S.A. § 5402(c)(2) is amended to read: 3
(2) The Secretary of Education shall determine each municipality’s net 4
nonhomestead education tax payment and its net homestead education tax 5
payment to the State based on grand list information received by the Secretary 6
not later than the March 15 prior to the June 1 net payment. Payment shall be 7
accompanied by a return prescribed by the Secretary of Education. Each 8
municipality may retain 0.225 of one percent of the total education tax 9
collected, only upon timely remittance of net payment to the State Treasurer or 10
to the applicable school district or districts. Each municipality may also retain 11
$15.00 for each late property tax credit claim filed after April 15 and before 12
September 2, as notified by the Department of Taxes, for the cost of issuing a 13
new property tax bill. 14
* * * Downtown and Village Center Tax Credit * * * 15
Sec. 12. 32 V.S.A. § 5930ee is amended to read: 16
§ 5930ee. LIMITATIONS 17
Beginning in fiscal year 2010 and thereafter, the State Board may award tax 18
credits to all qualified applicants under this subchapter, provided that: 19 BILL AS INTRODUCED H.135
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(1) the total amount of tax credits awarded annually, together with sales 1
tax reallocated under section 9819 of this title, does not exceed $3,000,000.00 2
$5,000,000.00; 3
* * * 4
* * * Effective Dates * * * 5
Sec. 13. EFFECTIVE DATES 6
This act shall take effect on passage except: 7
(1) notwithstanding 1 V.S.A. § 214, Secs. 1 and 2 (annual conformity to 8
federal tax laws) shall take effect retroactively on January 1, 2025 and shall 9
apply to taxable years beginning on and after January 1, 2024; 10
(2) notwithstanding 1 V.S.A. § 214, Sec. 3 (personal income tax filings, 11
credits, and exemptions) shall take effect retroactively on January 1, 2025 and 12
shall apply to taxable years beginning on and after January 1, 2025; 13
(3) Sec. 9 (pay for property valuation hearing officers) shall take effect 14
on July 1, 2025; and 15
(4) notwithstanding 1 V.S.A. § 214, Sec. 10 (flooding abatement 16
reimbursement program) shall take effect retroactively on November 15, 2024. 17