Vermont 2025-2026 Regular Session

Vermont Senate Bill S0017 Compare Versions

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

Old	New	Differences
1	1	BILL AS INTRODUCED S.17
2	2	2025 Page 1 of 5
3	3
4	4
5	5	VT LEG #379186 v.1
6	6	S.17 1
7	7	Introduced by Senators Collamore, Beck, Brennan, Brock, Chittenden, 2
8	8	Douglass, Harrison, Hart, Hashim, Heffernan, Ingalls, Lyons, 3
9	9	Major, Mattos, Norris, Plunkett, Ram Hinsdale, Weeks, 4
10	10	Westman, White and Williams 5
11	11	Referred to Committee on 6
12	12	Date: 7
13	13	Subject: Taxation; income tax; military retirement; survivor benefit income; 8
14	14	exemption 9
15	15	Statement of purpose of bill as introduced: This bill proposes to exempt 10
16	16	military retirement and survivor benefit income from Vermont income tax. 11
17	17	An act relating to exempting military retirement and survivor benefit 12
18	18	income from Vermont income tax 13
19	19	It is hereby enacted by the General Assembly of the State of Vermont: 14
20	20	Sec. 1. 32 V.S.A. § 5811 is amended to read: 15
21	21	§ 5811. DEFINITIONS 16
22	22	As used in this chapter unless the context requires otherwise: 17
23	23	* * * 18
24	24	(21) “Taxable income” means, in the case of an individual, federal 19
25	25	adjusted gross income determined without regard to 26 U.S.C. § 168(k) and: 20 BILL AS INTRODUCED S.17
26	26	2025 Page 2 of 5
27	27
28	28
29	29	VT LEG #379186 v.1
30	30	* * * 1
31	31	(B) decreased by the following items of income (to the extent such 2
32	32	income is included in federal adjusted gross income): 3
33	33	(i) income from U.S. government obligations; 4
34	34	(ii) with respect to adjusted net capital gain income as defined in 5
35	35	26 U.S.C. § 1(h) reduced by the total amount of any qualified dividend 6
36	36	income: either the first $5,000.00 of such adjusted net capital gain income or 7
37	37	40 percent of adjusted net capital gain income from the sale of assets held by 8
38	38	the taxpayer for more than three years, except not adjusted net capital gain 9
39	39	income from: 10
40	40	(I) the sale of any real estate or portion of real estate used by 11
41	41	the taxpayer as a primary or nonprimary residence; or 12
42	42	(II) the sale of depreciable personal property other than farm 13
43	43	property and standing timber; or stocks or bonds publicly traded or traded on 14
44	44	an exchange, or any other financial instruments; regardless of whether sold by 15
45	45	an individual or business; and provided that the total amount of decrease under 16
46	46	this subdivision (21)(B)(ii) shall not exceed 40 percent of federal taxable 17
47	47	income or $350,000.00, whichever is less; 18
48	48	(iii) recapture of State and local income tax deductions not taken 19
49	49	against Vermont income tax; 20 BILL AS INTRODUCED S.17
50	50	2025 Page 3 of 5
51	51
52	52
53	53	VT LEG #379186 v.1
54	54	(iv) the portion of certain retirement income and federally taxable 1
55	55	benefits received under the federal Social Security Act that is required to be 2
56	56	excluded under section 5830e of this chapter; 3
57	57	(v) the amount of any federal deduction or credit that the taxpayer 4
58	58	would have been allowed for the cultivation, testing, processing, or sale of 5
59	59	cannabis or cannabis products as authorized under 7 V.S.A. chapter 33 or 37, 6
60	60	but for 26 U.S.C. § 280E; and 7
61	61	(vi) the amount of interest paid by a qualified resident taxpayer 8
62	62	during the taxable year on a qualified education loan for the costs of attendance 9
63	63	at an eligible educational institution; and 10
64	64	(vii) U.S. military retirement income and U.S. military survivor 11
65	65	benefit income received by the surviving spouse or dependent of the deceased 12
66	66	service member; and 13
67	67	* * * 14
68	68	Sec. 2. 32 V.S.A. § 5830e is amended to read: 15
69	69	§ 5830e. RETIREMENT INCOME; SOCIAL SECURITY INCOME 16
70	70	* * * 17
71	71	(c) Other contributory retirement systems; earnings not covered by Social 18
72	72	Security. Other retirement income, except U.S. military retirement income 19
73	73	pursuant to subsection (d) of this section, received by a taxpayer of this State 20
74	74	shall be excluded pursuant to subsection (b) of this section as though the 21 BILL AS INTRODUCED S.17
75	75	2025 Page 4 of 5
76	76
77	77
78	78	VT LEG #379186 v.1
79	79	income were received from the Civil Service Retirement System and shall be 1
80	80	subject to the limitations under subsection (e) of this section, provided that: 2
81	81	(1) the income is received from a contributory annuity, pension, 3
82	82	endowment, or retirement system of: 4
83	83	(A) the U.S. government or a political subdivision or instrumentality 5
84	84	of the U.S. government; 6
85	85	(B) this State or a political subdivision or instrumentality of this 7
86	86	State; or 8
87	87	(C) another state or a political subdivision or instrumentality of 9
88	88	another state; and 10
89	89	(2) the contributory system from which the income is received was 11
90	90	based on earnings that were not covered by the Social Security Act. 12
91	91	(d) U.S. military retirement income. U.S. military retirement income 13
92	92	received by a taxpayer of this State shall be excluded pursuant to subsection 14
93	93	(b) of this section as though the income were received from the Civil Service 15
94	94	Retirement System and shall be subject to the limitations under subsection (e) 16
95	95	of this section. [Repealed.] 17
96	96	(e) Requirement to elect one exclusion. A taxpayer of this State who is 18
97	97	eligible during the taxable year for the Social Security income exclusion under 19
98	98	subsection (a) of this section and any one or both of the exclusions under 20
99	99	subsections (b)–(d) and (c) of this section shall elect either one of the 21 BILL AS INTRODUCED S.17
100	100	2025 Page 5 of 5
101	101
102	102
103	103	VT LEG #379186 v.1
104	104	exclusions for which the taxpayer is eligible under subsections (b)–(d) and (c) 1
105	105	of this section or the Social Security income exclusion under subsection (a) of 2
106	106	this section, but not both, for the taxable year. A taxpayer of this State who is 3
107	107	eligible during the taxable year for more than one of the both exclusions under 4
108	108	subsections (b)–(d) and (c) of this section shall elect only one of the exclusions 5
109	109	for which the taxpayer is eligible for the taxable year. 6
110	110	Sec. 3. EFFECTIVE DATES 7
111	111	(a) This section shall take effect on passage. 8
112	112	(b) Notwithstanding 1 V.S.A. § 214, Secs. 1 and 2 shall take effect 9
113	113	retroactively on January 1, 2026 and apply to taxable years on and after 10
114	114	January 1, 2026. 11