BILL AS INTRODUCED S.104
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S.104 1
Introduced by Senator Vyhovsky 2
Referred to Committee on 3
Date: 4
Subject: Education; State funding of public education; taxation and finance; 5
education property tax; education income tax; education finance 6
Statement of purpose of bill as introduced: This bill proposes to transition 7
from an education property tax to an education income tax in fiscal year 2027. 8
This bill would create an education tax that is based on the income of Vermont 9
homeowners with a rate determined by locally voted budgets. This bill 10
proposes to impose the education tax on the income of all Vermont residents 11
(both homeowners and renters) in fiscal year 2030. This bill would eliminate 12
the homestead education property tax and levy the nonhomestead education 13
property tax on all property except residential dwellings and the two-acre 14
parcel surrounding the dwellings. This bill would continue to provide the 15
existing renter credit and create a new renter credit against the education 16
income tax. This bill also proposes to update the property tax credit income 17
sensitivity measures to provide relief to a broader class of Vermont taxpayers 18
in fiscal year 2026. This bill also proposes to address revenue lost due to the 19
expansion of the income sensitivity measures by creating a one-year new top 20
marginal tax rate on income. 21 BILL AS INTRODUCED S.104
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An act relating to income-based education funding 1
It is hereby enacted by the General Assembly of the State of Vermont: 2
* * * Income Sensitivity and New Income Tax Bracket * * * 3
Sec. 1. 32 V.S.A. § 6066 is amended to read: 4
§ 6066. COMPUTATION OF PROPERTY TAX CREDIT AND RENTER 5
CREDIT 6
(a) An eligible claimant who owned the homestead on April 1 of the year in 7
which the claim is filed shall be entitled to a credit for the prior year’s 8
homestead property tax liability amount determined as follows: 9
(1)(A) For a claimant with household income of $90,000.00 10
$130,000.00 or more: 11
(i) the statewide education tax rate, multiplied by the equalized 12
value of the housesite in the taxable year; 13
(ii) minus (if less) the sum of: 14
(I) the income percentage of household income for the taxable 15
year; plus 16
(II) the statewide education tax rate, multiplied by the 17
equalized value of the housesite in the taxable year in excess of $225,000.00 18
$400,000.00. 19
(B) For a claimant with household income of less than $90,000.00 20
but more than $47,000.00 $60,000.00, the statewide education tax rate, 21 BILL AS INTRODUCED S.104
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multiplied by the equalized value of the housesite in the taxable year, minus (if 1
less) the sum of: 2
(i) the income percentage of household income for the taxable 3
year; plus 4
(ii) the statewide education tax rate, multiplied by the equalized 5
value of the housesite in the taxable year in excess of $400,000.00 6
$1,000,000.00. 7
(C) For a claimant whose household income does not exceed 8
$47,000.00 $60,000.00, the statewide education tax rate, multiplied by the 9
equalized value of the housesite in the taxable year, minus the lesser of: 10
(i) the sum of the income percentage of household income for the 11
taxable year plus the statewide education tax rate, multiplied by the equalized 12
value of the housesite in the taxable year in excess of $400,000.00 13
$1,000,000.00; or 14
(ii) the statewide education tax rate, multiplied by the equalized 15
value of the housesite in the taxable year reduced by $15,000.00. 16
* * * 17
(3) A claimant whose household income does not exceed $47,000.00 18
shall also be entitled to an additional credit amount from the claimant’s 19
municipal taxes for the upcoming fiscal year that is equal to the amount by 20
which the municipal property taxes for the municipal fiscal year that began in 21 BILL AS INTRODUCED S.104
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the taxable year upon the claimant’s housesite exceeds a percentage of the 1
claimant’s household income for the taxable year as follows: 2
If household income (rounded then the taxpayer is entitled to 3
to the nearest dollar) is: credit for the reduced property tax in 4
excess of this percent of that income 5
$0.00 — 9,999.00 1.50 6
$10,000.00 — 47,000.00 3.00 7
(4) A claimant whose household income does not exceed $47,000.00 8
$60,000.00 shall also be entitled to an additional credit amount from the 9
claimant’s statewide education tax for the upcoming fiscal year that is equal to 10
the amount by which the education property tax for the municipal fiscal year 11
that began in the taxable year upon the claimant’s housesite, reduced by the 12
credit amount determined under subdivisions (1) and (2) of this subsection, 13
exceeds a percentage of the claimant’s household income for the taxable year 14
as follows: 15
If household income (rounded then the taxpayer is entitled to 16
to the nearest dollar) is: credit for the reduced property tax in 17
excess of this percent of that income 18
$0.00 — 9,999.00 0.50 19
$10,000 — 24,999.00 1.50 20
$25,000.00 — 47,000 46,999.00 2.00 21 BILL AS INTRODUCED S.104
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$47,000 — 60,000.00 lesser of 2.50 1
or town rate 2
(5) In no event shall the credit provided for in subdivision (3) or (4) of 3
this subsection exceed the amount of the reduced property tax. The credits 4
under subdivision (4) of this subsection shall be calculated considering only 5
the tax due on the first $400,000.00 $1,000,000.00 in equalized housesite 6
value. 7
* * * 8
Sec. 2. INTENT; OFFSETTING LOSSES TO THE EDUCATION FUND 9
It is the intent of the General Assembly to transfer 12.5 percent of the 10
revenue collected pursuant to the highest marginal tax rate imposed under 32 11
V.S.A. § 5822 from the General Fund to the Education Fund in fiscal year 12
2026 to offset losses to the Education Fund resulting from the income 13
sensitivity adjustments adopted pursuant to this act. 14
Sec. 3. 32 V.S.A. § 5822 is amended to read: 15
§ 5822. TAX ON INCOME OF INDIVIDUALS, ESTATES, AND TRUSTS 16
(a) A tax is imposed for each taxable year upon the taxable income earned 17
or received in that year by every individual, estate, and trust, subject to income 18
taxation under the laws of the United States, in an amount determined by the 19
following tables, and adjusted as required under this section: 20
(1) Married individuals filing joint returns and surviving spouses: 21 BILL AS INTRODUCED S.104
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If taxable income is: The tax is: 1
Not over $64,600.00 3.35% of taxable income 2
Over $64,600.00 but $2,164.00 plus 6.60% of 3
not over $156,150.00 the amount of taxable 4
income over $64,600.00 5
Over $156,150.00 but $8,206.00 plus 7.60% 6
not over $237,950.00 of the amount of taxable 7
income over $156,150.00 8
Over $237,950.00 but $14,423.00 plus 8.75% 9
not over $310,000.00 of the amount of taxable 10
income over $237,950.00 11
Over $310,000.00 $20,727.00 plus 10.00% 12
of the amount of taxable 13
income over $310,000.00 14
(2) Heads of household: 15
If taxable income is: The tax is: 16
Not over $51,850.00 3.35% of taxable income 17
Over $51,850.00 but $1,737.00 plus 6.60% of 18
not over $133,850.00 the amount of taxable 19
income over $51,850.00 20
Over $133,850.00 but $7,149.00 plus 7.60% 21 BILL AS INTRODUCED S.104
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not over $216,700.00 of the amount of taxable 1
income over $133,850.00 2
Over $216,700.00 but $13,446.00 plus 8.75% 3
not over $300,000.00 of the amount of taxable 4
income over $216,700.00 5
Over $300,000.00 $20,735.00 plus 10.00% 6
of the amount of taxable 7
income over $300,000.00 8
(3) Unmarried individuals (other than surviving spouses or heads of 9
household): 10
If taxable income is: The tax is: 11
Not over $38,700.00 3.35% of taxable income 12
Over $38,700.00 but $1,296.00 plus 6.60% of 13
not over $93,700.00 the amount of taxable 14
income over $38,700.00 15
Over $93,700.00 but $4,926.00 plus 7.60% 16
not over $195,450.00 of the amount of taxable 17
income over $93,700.00 18
Over $195,450.00 but $12,659.00 plus 8.75% 19
not over $275,000.00 of the amount of taxable 20
income over $195,450.00 21 BILL AS INTRODUCED S.104
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Over $275,000.00 $19,620.00 plus 10.00% 1
of the amount of taxable 2
income over $275,000.00 3
(4) Married individuals filing separate returns: 4
If taxable income is: The tax is: 5
Not over $32,300.00 3.35% of taxable income 6
Over $32,300.00 but $1,082.00 plus 6.60% of 7
not over $78,075.00 the amount of taxable 8
income over $32,300.00 9
Over $78,075.00 but $4,103.00 plus 7.60% 10
not over $118,975.00 of the amount of taxable 11
income over $78,075.00 12
Over $118,975.00 but $7,212.00 plus 8.75% 13
not over $163,000.00 of the amount of taxable 14
income over $118,975.00 15
Over $163,000.00 $11,064.00 plus 10.00% 16
of the amount of taxable 17
income over $163,000.00 18
(5) Estate and trusts: 19
If taxable income is: The tax is: 20
$2,600.00 or less 3.35% of taxable income 21 BILL AS INTRODUCED S.104
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Over $2,600.00 but $87.00 plus 6.60% of 1
not over $6,100.00 the amount of taxable 2
income over $2,600.00 3
Over $6,100.00 but $318.00 plus 7.60% 4
not over $9,350.00 of the amount of taxable 5
income over $6,100.00 6
Over $9,350.00 but $565.00 plus 8.75% 7
not over $12,500.00 of the amount of taxable 8
income over $9,350.00 9
Over $12,500.00 $840.00 plus 10.00% 10
of the amount of taxable 11
income over $12,500.00 12
* * * 13
* * * Repeal of New Income Tax Bracket * * * 14
Sec. 4. 32 V.S.A. § 5822 is amended to read: 15
§ 5822. TAX ON INCOME OF INDIVIDUALS, ESTATES, AND TRUSTS 16
(a) A tax is imposed for each taxable year upon the taxable income earned 17
or received in that year by every individual, estate, and trust, subject to income 18
taxation under the laws of the United States, in an amount determined by the 19
following tables, and adjusted as required under this section: 20
(1) Married individuals filing joint returns and surviving spouses: 21 BILL AS INTRODUCED S.104
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If taxable income is: The tax is: 1
Not over $64,600.00 3.35% of taxable income 2
Over $64,600.00 but $2,164.00 plus 6.60% of 3
not over $156,150.00 the amount of taxable 4
income over $64,600.00 5
Over $156,150.00 but $8,206.00 plus 7.60% 6
not over $237,950.00 of the amount of taxable 7
income over $156,150.00 8
Over $237,950.00 but $14,423.00 plus 8.75% 9
not over $310,000.00 of the amount of taxable 10
income over $237,950.00 11
Over $310,000.00 $20,727.00 plus 10.00% 12
of the amount of taxable 13
income over $310,000.00 14
(2) Heads of household: 15
If taxable income is: The tax is: 16
Not over $51,850.00 3.35% of taxable income 17
Over $51,850.00 but $1,737.00 plus 6.60% of 18
not over $133,850.00 the amount of taxable 19
income over $51,850.00 20
Over $133,850.00 but $7,149.00 plus 7.60% 21 BILL AS INTRODUCED S.104
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not over $216,700.00 of the amount of taxable 1
income over $133,850.00 2
Over $216,700.00 but $13,446.00 plus 8.75% 3
not over $300,000.00 of the amount of taxable 4
income over $216,700.00 5
Over $300,000.00 $20,735.00 plus 10.00% 6
of the amount of taxable 7
income over $300,000.00 8
(3) Unmarried individuals (other than surviving spouses or heads of 9
household): 10
If taxable income is: The tax is: 11
Not over $38,700.00 3.35% of taxable income 12
Over $38,700.00 but $1,296.00 plus 6.60% of 13
not over $93,700.00 the amount of taxable 14
income over $38,700.00 15
Over $93,700.00 but $4,926.00 plus 7.60% 16
not over $195,450.00 of the amount of taxable 17
income over $93,700.00 18
Over $195,450.00 but $12,659.00 plus 8.75% 19
not over $275,000.00 of the amount of taxable 20
income over $195,450.00 21 BILL AS INTRODUCED S.104
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Over $275,000.00 $19,620.00 plus 10.00% 1
of the amount of taxable 2
income over $275,000.00 3
(4) Married individuals filing separate returns: 4
If taxable income is: The tax is: 5
Not over $32,300.00 3.35% of taxable income 6
Over $32,300.00 but $1,082.00 plus 6.60% of 7
not over $78,075.00 the amount of taxable 8
income over $32,300.00 9
Over $78,075.00 but $4,103.00 plus 7.60% 10
not over $118,975.00 of the amount of taxable 11
income over $78,075.00 12
Over $118,975.00 but $7,212.00 plus 8.75% 13
not over $163,000.00 of the amount of taxable 14
income over $118,975.00 15
Over $163,000.00 $11,064.00 plus 10.00% 16
of the amount of taxable 17
income over $163,000.00 18
(5) Estate and trusts: 19
If taxable income is: The tax is: 20
$2,600.00 or less 3.35% of taxable income 21 BILL AS INTRODUCED S.104
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Over $2,600.00 but $87.00 plus 6.60% of 1
not over $6,100.00 the amount of taxable 2
income over $2,600.00 3
Over $6,100.00 but $318.00 plus 7.60% 4
not over $9,350.00 of the amount of taxable 5
income over $6,100.00 6
Over $9,350.00 but $565.00 plus 8.75% 7
not over $12,500.00 of the amount of taxable 8
income over $9,350.00 9
Over $12,500.00 $840.00 plus 10.00% 10
of the amount of taxable 11
income over $12,500.00 12
* * * 13
* * * Education Income Tax * * * 14
Sec. 5. 32 V.S.A. chapter 151, subchapter 14 is added to read: 15
Subchapter 14. Education Income Tax 16
§ 5961. NAME OF TAX 17
The tax imposed by this subchapter shall be known as the Vermont 18
education income tax. 19 BILL AS INTRODUCED S.104
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§ 5962. EDUCATION INCOME TAX ON INDIVIDUALS 1
(a) In addition to the personal income tax assessed under section 5822 of 2
this title, there shall be an education income tax imposed each taxable year 3
upon the adjusted gross income earned or received in that year by every 4
individual subject to income taxation under the laws of the United States who 5
is not listed as a renter for that year on a landlord certificate furnished pursuant 6
to section 6069 of this title, in an amount determined by the following tables 7
and adjusted as required under this section and section 5963 of this subchapter. 8
(1) Married individuals filing joint returns and surviving spouses: 9
If adjusted gross income is: The tax is: 10
Not over $64,600.00 2.00% of adjusted 11
gross income 12
Over $64,600.00 but $1,292.00 plus 4.00% of 13
not over $156,150.00 the amount of adjusted 14
gross income over $64,600.00 15
Over $156,150.00 but $4,954.00 plus 6.00% 16
not over $237,950.00 of the amount of adjusted 17
gross income over $156,150.00 18
Over $237,950.00 $9,862.00 plus 8.00% 19
of the amount of adjusted 20
gross income over $237,950.00 21 BILL AS INTRODUCED S.104
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(2) Heads of household: 1
If adjusted gross income is: The tax is: 2
Not over $51,850.00 2.00% of adjusted 3
gross income 4
Over $51,850.00 but $1,037.00 plus 4.00% of 5
not over $133,850.00 the amount of adjusted 6
gross income over $51,850.00 7
Over $133,850.00 but $4,317.00 plus 6.00% 8
not over $216,700.00 of the amount of adjusted 9
gross income over $133,850.00 10
Over $216,700.00 $9,288.00 plus 8.00% 11
of the amount of adjusted 12
gross income over $216,700.00 13
(3) Unmarried individuals, other than surviving spouses or heads of 14
household: 15
If adjusted gross income is: The tax is: 16
Not over $38,700.00 2.00% of adjusted 17
gross income 18
Over $38,700.00 but $774.00 plus 4.00% of 19
not over $93,700.00 the amount of adjusted 20
gross income over $38,700.00 21 BILL AS INTRODUCED S.104
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Over $93,700.00 but $2,974.00 plus 6.00% 1
not over $195,450.00 of the amount of adjusted 2
gross income over $93,700.00 3
Over $195,450.00 $9,079.00 plus 8.00% 4
of the amount of adjusted 5
gross income over $195,450.00 6
(4) Married individuals filing separate returns: 7
If adjusted gross income is: The tax is: 8
Not over $32,300.00 2.00% of adjusted 9
gross income 10
Over $32,300.00 but $646.00 plus 4.00% of 11
not over $78,075.00 the amount of adjusted 12
gross income over $32,300.00 13
Over $78,075.00 but $2,477.00 plus 6.00% 14
not over $118,975.00 of the amount of adjusted 15
gross income over $78,075.00 16
Over $118,975.00 $4,931.00 plus 8.00% 17
of the amount of adjusted 18
gross income over $118,975.00 19 BILL AS INTRODUCED S.104
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(b) The amounts of adjusted gross income shown in the tables in this 1
section shall be adjusted annually for inflation by the Commissioner of Taxes 2
pursuant to subdivision 5822(b)(2) of this chapter. 3
(c)(1) The rates shown in the tables in this section shall be adjusted for 4
each school district by dividing the school district’s per pupil education 5
spending, as defined in 16 V.S.A. § 4001(6), by the prior year’s statewide 6
average per pupil education spending and multiplying the result by the rates 7
under this section. 8
(2) The final rate for each school district determined under this 9
subsection shall apply to the Vermont income, as defined in section 5963 of 10
this title, of a resident or part-year resident for the entire taxable year. As used 11
in this subdivision, the “final rate” for each school district means the average 12
of the district’s rates in effect between January 1 and December 31. 13
(3) A resident or part-year resident individual shall pay the rate adjusted 14
under this subsection for the individual’s school district of residence on 15
January 1 of the taxable year or, in the case of a part-year resident individual 16
whose residence begins on a day other than January 1, the school district where 17
the individual resides on the first day of residence in this State. The rate 18
adjustments under this subsection shall not apply to a nonresident individual. 19
(d) The tax liability determined under subsections (a) through (c) of this 20
section shall be reduced by a percentage equal to the portion of adjusted gross 21 BILL AS INTRODUCED S.104
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income that is not Vermont income; provided, however, that if a taxpayer’s 1
Vermont income exceeds the taxpayer’s adjusted gross income, no reduction 2
shall be made and provided further that if a taxpayer has zero or negative 3
Vermont income and the taxpayer’s Vermont income computed without regard 4
to the reductions in section 5963 of this subchapter does not equal or exceed 5
the taxpayer’s adjusted gross income, no tax shall be due under this section. 6
(e) The education income tax under this subchapter shall be assessed and 7
administered in the same manner as the personal income tax under this chapter. 8
(f) As used in this section, “married individuals,” “surviving spouse,” 9
“head of household,” and “unmarried individual” have the same meaning as 10
under the Internal Revenue Code. 11
§ 5963. VERMONT INCOME OF INDIVIDUALS 12
(a) As used in this subchapter, for any taxable year, the Vermont income of 13
a resident individual is the adjusted gross income of the individual for that 14
taxable year, less income exempted from State taxation under the laws of the 15
United States. 16
(b)(1) As used in this subchapter, for any taxable year, the Vermont income 17
of a nonresident individual is the sum of the following items of income to the 18
extent they are required to be included in the adjusted gross income of the 19
individual: 20 BILL AS INTRODUCED S.104
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(A) rents and royalties derived from the ownership of property 1
located within this State; 2
(B) gains from the sale or exchange of property located within this 3
State; 4
(C) wages, salaries, commissions, or other income received with 5
respect to services performed within this State; 6
(D) income, other than income exempted from State taxation under 7
the laws of the United States, derived from every business, trade, occupation, 8
or profession to the extent that the business, trade, occupation, or profession is 9
carried on within this State, including any compensation received: 10
(i) under an agreement not to compete with a business operating in 11
Vermont; 12
(ii) for goodwill associated with the sale of a Vermont business; or 13
(iii) for services to be performed under a contract associated with 14
the sale of a Vermont business, unless it is shown that the compensation for 15
services does not constitute income from the sale of the business; 16
(E) income that was previously deferred under a nonqualified 17
deferred compensation plan and that would have previously been included in 18
the taxpayer’s Vermont income if it had not been deferred and income derived 19
from such previously deferred income; and 20 BILL AS INTRODUCED S.104
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(F) proceeds from wagering transactions made within the State; or 1
any Vermont State Lottery, tri-state lottery, or multijurisdictional lottery ticket 2
paid to a person who purchased the ticket in Vermont, including payments 3
received from a third party for the transfer of the rights to future proceeds 4
related to the ticket; and the Commissioner may require withholding of any 5
taxes due to the State under this subdivision (b)(1) from payments of wagering 6
or lottery proceeds. 7
(2) As used in this subchapter, for any taxable year, the Vermont income 8
of a nonresident individual shall not include any income from the activities 9
listed in this subdivision or the income of a nonresident through an entity, such 10
as a partnership, limited liability company, or trust, provided that the entity’s 11
activities in this State are limited to activities that, without more, would not 12
constitute nexus, plus any or all of the following activities necessary to create 13
or maintain a web page or internet site for the nonresident or entity: 14
(A) ownership of data or programming code in this State, or use of 15
that data or programming code by a person other than the nonresident or entity 16
or by a person not in this State; 17
(B) ownership of, or receipt of services from, computer servers in 18
this State; and 19
(C) receipt of computer processing or web hosting services from a 20
computer service provider or web hosting service in this State. 21 BILL AS INTRODUCED S.104
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(c) As used in this subchapter, for any taxable year, the Vermont income of 1
a part-year resident individual or trust is the sum of: 2
(1) all items of income constituting Vermont income for the purpose of 3
subsection (a) of this section that are earned or received during the period of 4
the taxpayer’s residency in this State in the taxable year; and 5
(2) all items of income constituting Vermont income for the purposes of 6
subdivision (b)(1) of this section that are earned or received during the period 7
of the taxpayer’s nonresidency in this State in the taxable year. 8
* * * Withholding, Estimated Payments, and Returns * * * 9
Sec. 6. 32 V.S.A. § 5841 is amended to read: 10
§ 5841. REQUIREMENT AND RATE OF WITHHOLDING 11
(a) Every person who is required under the laws of the United States to 12
withhold federal income tax from payments that are also subject to Vermont 13
income tax or education income tax shall deduct and withhold during the 14
calendar year from the payments made by such person such the amount of tax 15
as the Commissioner shall prescribe. Every person who makes payments of 16
income with respect to services performed for such person that were previously 17
deferred under a nonqualified deferred compensation plan shall deduct and 18
withhold during the calendar year from the payments made by such person six 19
percent of any payment (including any withheld tax) of such previously 20
deferred income and of income derived from such previously deferred income. 21 BILL AS INTRODUCED S.104
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The Commissioner may authorize any person to deduct and withhold Vermont 1
income tax and education income tax from any other payments that are subject 2
to the tax taxes imposed by this chapter. Notwithstanding the foregoing, banks 3
(as defined in 8 V.S.A. § 909a(a)) shall not be required to withhold Vermont 4
income tax or education income tax from payments that are subject to federal 5
back-up withholding. 6
(b) The Commissioner shall establish such withholding tables, schedules, 7
or formulae as will result in the withholding of such amounts from the 8
payments made by any person during any taxable year, as shall closely 9
approximate the income tax liabilities of the recipients of those payments with 10
respect to those payments for that year under this chapter, including any 11
liability for the education income tax under section 5962 of this title. 12
* * * 13
(d) The Commissioner shall base the withholding requirements for the 14
education income tax under section 5962 of this title on the federal adjusted 15
gross income of recipients from the prior year and the statewide average rates 16
from the prior year, provided the rate shall be adjusted annually for inflation 17
using the National Income and Product Accounts (NIPA) Implicit Price 18
Deflator for State and Local Government Consumption Expenditures and 19
Gross Investment as reported by the U.S. Department of Commerce, Bureau of 20
Economic Analysis. 21 BILL AS INTRODUCED S.104
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Sec. 7. 32 V.S.A. § 5851(1) is amended to read: 1
(1) “Tax” means, for any taxpayer and for any taxable year, the income 2
tax liability of the taxpayer for that taxable year under section 5822 or 5962 of 3
this title, reduced by any allowable credits against such tax. 4
Sec. 8. 32 V.S.A. § 5852(a) is amended to read: 5
(a) Every individual, estate, and trust subject to taxation under section 5822 6
of this title (other than a person receiving at least two-thirds of his or her the 7
person’s income from farming or fishing as defined under the laws of the 8
United States) or section 5962 of this title shall make installment payments of 9
the taxpayer’s estimated tax liability for each taxable year. The amount of 10
each payment shall be 25 percent of the required annual payment. For any 11
taxable year, payments shall be made on or before April 15, June 15, and 12
September 15 of the taxable year and January 15 of the following taxable year. 13
In applying this section to a taxable year beginning on any date other than 14
January 1, there shall be substituted, for the months specified in this section, 15
the months that correspond thereto. 16
Sec. 9. 32 V.S.A. § 5861 is amended to read: 17
§ 5861. RETURNS BY INDIVIDUALS, TRUSTS, AND ESTATES 18
(a) Every individual, trust, or estate subject to taxation for any taxable year 19
under section 5822 or 5962 of this title shall file a Vermont personal income 20 BILL AS INTRODUCED S.104
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tax return for that taxable year if that person is required to file a United States 1
income tax return for that year and: 2
(1) earned or received more than $100.00 of Vermont income, or; 3
(2) earned or received more than $1,000.00 in gross income from the 4
sources listed in subdivisions 5823(b)(1) through (6) or subsections 5962(b) 5
and (c) of this title, whether or not a resident, in that year,; or 6
(3) has a tax liability under this chapter for that year. 7
* * * 8
(e) The Commissioner may shall require information on a Vermont 9
personal income tax return that is sufficient to identify the school district, as 10
defined in 16 V.S.A. § 11(a)(10), in which the taxpayer resides and whether 11
the taxpayer’s residence is a rental dwelling in this State. The Commissioner 12
may consider a return incomplete if the information required under this 13
subsection is not provided and shall cause the return to be completed. 14
* * * 15
Sec. 10. 32 V.S.A. § 5820 is amended to read: 16
§ 5820. PURPOSE 17
(a) This chapter is intended to conform the Vermont personal and, 18
corporate, and education income taxes with the U.S. Internal Revenue Code, 19
except as otherwise expressly provided, in order to simplify the taxpayer’s 20 BILL AS INTRODUCED S.104
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filing of returns, reduce the taxpayer’s accounting burdens, and facilitate the 1
collection and administration of these taxes. 2
(b) It is intended that, for any taxable year, individuals, estates, and trusts 3
shall be taxed upon only their Vermont income for that year, but that the rate at 4
which the Vermont income of any taxpayer is taxed under this chapter shall 5
reflect the taxpayer’s ability to pay as measured by his or her the taxpayer’s 6
adjusted gross income for the taxable year. 7
* * * Nonhomestead Education Property Tax * * * 8
Sec. 11. 32 V.S.A. § 5401 is amended to read: 9
§ 5401. DEFINITIONS 10
As used in this chapter: 11
* * * 12
(7) “Homestead”: 13
(A) “Homestead” means the principal dwelling and parcel two acres 14
of land surrounding the dwelling, owned and occupied by a resident individual 15
as the individual’s domicile or owned and fully leased on April 1, provided the 16
property is not leased for more than 182 days out of the calendar year or, for 17
purposes of the renter credit under subsection 6066(b) of this title, is rented 18
and occupied by a resident individual as the individual’s domicile. 19
* * * 20 BILL AS INTRODUCED S.104
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(G) For purposes of homestead declaration and application of the 1
homestead property tax rate, “homestead” “Homestead” also means a 2
residence that was the homestead of the decedent at the date of death and, from 3
the date of death through the next April 1, is held by the estate of the decedent 4
and not rented. 5
* * * 6
(10) “Nonhomestead property” means all property except: 7
* * * 8
(C) Homesteads declared in accordance with section 5410 of this title 9
as defined in subdivision (7) of this section. 10
* * * 11
(13)(A) “Education property tax spending adjustment” means the 12
greater of one or a fraction in which: 13
(i) the numerator is the district’s per pupil education spending plus 14
excess spending for the school year, and 15
(ii) the denominator is the property dollar equivalent yield for the 16
school year, as defined in subdivision (15) of this section, multiplied by the 17
statewide adjustment. 18
(B) “Education income tax spending adjustment” means the greater 19
of one or a fraction in which the numerator is the district’s per pupil education 20
spending plus excess spending for the school year, and the denominator is the 21 BILL AS INTRODUCED S.104
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income dollar equivalent yield for the school year, as defined in subdivision 1
(16) of this section. [Repealed.] 2
* * * 3
(15) “Property dollar equivalent yield” means the amount of per pupil 4
education spending that would result in a district having a homestead tax rate 5
of $1.00 per $100.00 of equalized education property value. [Repealed.] 6
(16) “Income dollar equivalent yield” means the amount of per pupil 7
education spending that would result in a district having an income percentage 8
in subdivision 6066(a)(2) of this title of 2.0 percent. [Repealed.] 9
* * * 10
Sec. 12. 32 V.S.A. § 5402 is amended to read: 11
§ 5402. NONHOMESTEAD EDUCATION PROPERTY TAX LIABILITY 12
(a) A statewide education tax is imposed on all nonhomestead and 13
homestead property at the following rates: 14
(1) The tax rate for nonhomestead property shall be rate of $1.59 per 15
$100.00 divided by the statewide adjustment. 16
(2) The tax rate for homestead property shall be $1.00 multiplied by the 17
education property tax spending adjustment for the municipality per $100.00 of 18
equalized education property value as most recently determined under section 19
5405 of this title. The homestead property tax rate for each municipality that is 20 BILL AS INTRODUCED S.104
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a member of a union or unified union school district shall be calculated as 1
required under subsection (e) of this section. 2
(b) The statewide nonhomestead education tax shall be calculated as 3
follows: 4
(1) The Commissioner of Taxes shall determine for each municipality 5
the nonhomestead education tax rates rate under subsection (a) of this section 6
divided by the number resulting from dividing the municipality’s most recent 7
common level of appraisal by the statewide adjustment. The legislative body 8
in each municipality shall then bill each property taxpayer at the homestead or 9
nonhomestead rate determined by the Commissioner under this subdivision, 10
multiplied by the nonhomestead education property tax grand list value of the 11
property, properly classified as homestead or nonhomestead property and 12
without regard to any other tax classification of the property. Statewide 13
nonhomestead education property tax bills shall show the tax due and the 14
calculation of the rate determined under subsection (a) of this section, divided 15
by the number resulting from dividing the municipality’s most recent common 16
level of appraisal by the statewide adjustment, multiplied by the current grand 17
list value of the property to be taxed. Statewide nonhomestead education 18
property tax bills shall also include language provided by the Commissioner 19
pursuant to subsection 5405(g) of this title. 20 BILL AS INTRODUCED S.104
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(2) Taxes assessed under this section shall be assessed and collected in 1
the same manner as taxes assessed under chapter 133 of this title with no tax 2
classification other than as homestead or nonhomestead property; provided, 3
however, that the tax levied under this chapter shall be billed to each taxpayer 4
by the municipality in a manner that clearly indicates the tax is separate from 5
any other tax assessed and collected under chapter 133, including an 6
itemization of the separate taxes due. The bill may be on a single sheet of 7
paper with the statewide education tax and other taxes presented separately and 8
side by side. 9
(3) If a district has not voted a budget by June 30, an interim homestead 10
education tax shall be imposed at the base rate determined under subdivision 11
(a)(2) of this section, divided by the number resulting from dividing the 12
municipality’s most recent common level of appraisal by the statewide 13
adjustment, but without regard to any spending adjustment under subdivision 14
5401(13) of this title. Within 30 days after a budget is adopted and the deadline 15
for reconsideration has passed, the Commissioner shall determine the 16
municipality’s homestead tax rate as required under subdivision (1) of this 17
subsection. [Repealed.] 18
(c)(1) The treasurer of each municipality shall by December 1 of the year in 19
which the tax is levied and on June 1 of the following year pay to the State 20
Treasurer for deposit in the Education Fund one-half of the municipality’s 21 BILL AS INTRODUCED S.104
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statewide nonhomestead tax and one-half of the municipality’s homestead 1
education tax, as determined under subdivision (b)(1) of this section. 2
(2) The Secretary of Education shall determine each municipality’s net 3
nonhomestead education tax payment and its net homestead education tax 4
payment to the State based on grand list information received by the Secretary 5
not later than the March 15 prior to the June 1 net payment. Payment shall be 6
accompanied by a return prescribed by the Secretary of Education. Each 7
municipality may retain 0.225 of one percent of the total education tax 8
collected, only upon timely remittance of net payment to the State Treasurer or 9
to the applicable school district or districts. Each municipality may also retain 10
$15.00 for each late property tax credit claim filed after April 15 and before 11
September 2, as notified by the Department of Taxes, for the cost of issuing a 12
new property tax bill. 13
(d) [Repealed.] 14
(e) The Commissioner of Taxes shall determine a homestead education tax 15
rate for each municipality that is a member of a union or unified union school 16
district as follows: 17
(1) For a municipality that is a member of a unified union school 18
district, use the base rate determined under subdivision (a)(2) of this section 19
and a spending adjustment under subdivision 5401(13) of this title based upon 20
the per pupil education spending of the unified union. 21 BILL AS INTRODUCED S.104
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(2) For a municipality that is a member of a union school district: 1
(A) Determine the municipal district homestead tax rate using the 2
base rate determined under subdivision (a)(2) of this section and a spending 3
adjustment under subdivision 5401(13) of this title based on the per pupil 4
education spending in the municipality who attends a school other than the 5
union school. 6
(B) Determine the union district homestead tax rate using the base 7
rate determined under subdivision (a)(2) of this section and a spending 8
adjustment under subdivision 5401(13) of this title based on the per pupil 9
education spending of the union school district. 10
(C) Determine a combined homestead tax rate by calculating the 11
weighted average of the rates determined under subdivisions (A) and (B) of 12
this subdivision (2), with weighting based upon the ratio of union school long-13
term membership, as defined in 16 V.S.A. § 4001(7), from the member 14
municipality to total long-term membership of the member municipality; and 15
the ratio of long-term membership attending a school other than the union 16
school to total long-term membership of the member municipality. Total long-17
term membership of the member municipality is based on the number of pupils 18
who are legal residents of the municipality and attending school at public 19
expense. If necessary, the Commissioner may adopt a rule to clarify and 20
facilitate implementation of this subsection (e). [Repealed.] 21 BILL AS INTRODUCED S.104
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Sec. 13. 32 V.S.A. § 5402b is amended to read: 1
§ 5402b. STATEWIDE EDUCATION TAX YIELDS RATES; 2
RECOMMENDATION OF THE COMMISSIONER 3
(a) Annually, not later than December 1, the Commissioner of Taxes, after 4
consultation with the Secretary of Education, the Secretary of Administration, 5
and the Joint Fiscal Office, shall calculate and recommend a property dollar 6
equivalent yield, an income dollar equivalent yield, the education income tax 7
rates and a nonhomestead property tax rate for the following fiscal year. In 8
making these calculations, the Commissioner shall assume: 9
(1) the homestead base tax rate in subdivision 5402(a)(2) of this title is 10
$1.00 per $100.00 of equalized education property value; 11
(2) the applicable percentage in subdivision 6066(a)(2) of this title is 12
2.0; 13
(3) the statutory reserves under 16 V.S.A. § 4026 and this section were 14
maintained at five percent; and 15
(4)(2) the percentage change in the average education tax bill applied to 16
nonhomestead property and the percentage change in the average education 17
income tax bill of homestead property and the percentage change in the 18
average education tax bill for taxpayers who claim a credit under subsection 19
6066(a) of this title are equal; 20 BILL AS INTRODUCED S.104
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(5) the equalized education grand list is multiplied by the statewide 1
adjustment in calculating the property dollar equivalent yield; and 2
(6) the nonhomestead rate is divided by the statewide adjustment. 3
(b) For each fiscal year, the property dollar equivalent yield and the income 4
dollar equivalent yield shall be the same as in the prior fiscal year, unless set 5
otherwise by the General Assembly. [Repealed.] 6
* * * 7
Sec. 14. 32 V.S.A. § 5404 is amended to read: 8
§ 5404. DETERMINATION OF EDUCATION PROPERTY TAX GRAND 9
LIST 10
(a)(1) Municipalities shall determine the education property tax grand list 11
by calculating one percent of the listed value of nonhomestead and homestead 12
real property as provided in this section. The listed value of all nonhomestead 13
and homestead real property in a municipality shall be its fair market value, its 14
value established under a stabilization agreement described in section 5404a of 15
this title, or the use value of property enrolled in a Use Value Program under 16
chapter 124 of this title. 17
(2) If a homestead is located on a parcel of greater than two acres, the 18
entire parcel shall be appraised at fair market value;, the housesite homestead 19
shall then be appraised as if it were situated on a separate parcel, and the value 20
of the housesite homestead shall be subtracted from the value of the total 21 BILL AS INTRODUCED S.104
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parcel to determine the value of the remainder of the parcel, which shall be 1
subject to the nonhomestead tax imposed under this chapter. Pursuant to 2
subdivision 4152(a)(9) of this title, a homestead shall be appraised and listed at 3
what the full fair market value of the property would be absent the exemption 4
from nonhomestead tax. 5
* * * 6
Sec. 15. 32 V.S.A. § 5405 is amended to read: 7
§ 5405. DETERMINATION OF EQUALIZED EDUCATION PROPERTY 8
TAX GRAND LIST AND COEFFICIENT OF DISPERSION 9
* * * 10
(c) In determining the fair market value of property that is required to be 11
listed at fair market value, the Commissioner shall take into consideration 12
those factors required by section 3481 of this title. The Commissioner shall 13
value property as of April 1 preceding the determination and shall take account 14
of all homestead declaration information available before October 1 each year. 15
* * * 16
(g) The Commissioner shall provide to municipalities for the front of 17
property tax bills the district homestead property tax rate before equalization, 18
the nonresidential nonhomestead tax rate before equalization, and the 19
calculation process that creates the equalized homestead and nonhomestead tax 20
rates rate. The Commissioner shall further provide to municipalities for the 21 BILL AS INTRODUCED S.104
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back of property tax bills an explanation of the common level of appraisal, 1
including its origin and purpose. 2
Sec. 16. 32 V.S.A. § 5406(c) is amended to read: 3
(c) If the Director of Property Valuation and Review certifies that a 4
municipality has completed a townwide reappraisal, the common level of 5
appraisal for that municipality shall be equal to its new grand list value divided 6
by its most recent equalized grand list value, for purposes of determining the 7
nonhomestead education property tax rates rate. 8
Sec. 17. 32 V.S.A. § 5409 is amended to read: 9
§ 5409. DUTIES OF MUNICIPALITIES AND ADMINISTRATION 10
The following shall apply with regard to the statewide nonhomestead 11
education property tax imposed under this chapter: 12
* * * 13
(2) If by August 1 a municipality has failed to issue notices of 14
assessment of the statewide nonhomestead education property tax, or if the 15
municipality fails for more than 90 days after the due date for any installment 16
payment to enforce the tax in the municipality, then the Commissioner of 17
Taxes shall either issue notices of assessment or collect the tax, or both, or 18
bring appropriate court action to require the municipal officials to issue notices 19
and collect the tax, as the Commissioner deems necessary. 20 BILL AS INTRODUCED S.104
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(3) In any case of administration under subdivision (2) of this section by 1
the Commissioner of Taxes of education property tax: 2
* * * 3
(C) The Commissioner may abate in whole or in part the statewide 4
nonhomestead education taxes property tax of a taxpayer who has been granted 5
an abatement of municipal taxes under 24 V.S.A. § 1535. 6
(4) [Repealed.] 7
(5) In case of insufficient property tax payment by a taxpayer to a 8
municipality, payments shall be allocated first to municipal property tax and 9
next to statewide nonhomestead education property tax. In case of insufficient 10
payment by a taxpayer to the Department of Taxes, payments shall be allocated 11
first to liabilities other than the nonhomestead education taxes property tax and 12
next to the nonhomestead education property tax. 13
(6) In case of overpayment by a taxpayer who has an income tax 14
liability under chapter 151 of this title and a homestead property tax liability, a 15
refund of the overpayment, after accounting for any benefit amount allowed 16
under chapter 154 of this title, shall be deemed to be a refund of income tax for 17
purposes of debt setoff under chapter 151, subchapter 12 of this title. 18
[Repealed.] 19 BILL AS INTRODUCED S.104
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(7) Notwithstanding section 435 of this title, the Commissioner shall 1
deposit the revenue from taxes the nonhomestead education property tax 2
imposed under this chapter in the education fund Education Fund. 3
(8) A municipality’s liability to the State for education taxes the 4
nonhomestead property tax shall not be reduced by any early payment property 5
tax discount or similar discount offered by the municipality. 6
* * * Repeals * * * 7
Sec. 18. REPEALS; HOMESTEAD PROPERTY TAX AND CREDIT 8
The following are repealed: 9
(1) 32 V.S.A. § 3108(b)(4) (interest on overpayments to homestead tax 10
liabilities); 11
(2) 32 V.S.A. § 3800(g) (statutory purpose for veterans’ homestead 12
property exemptions); 13
(3) 32 V.S.A. § 3802(11) (veterans’ homestead property exemptions); 14
and 15
(4) 32 V.S.A. § 5410 (property tax credit; homestead declaration). 16
Sec. 19. 32 V.S.A. § 4111(e) is amended to read: 17
(e) When the listers return the grand list book to the town clerk, they shall 18
notify by first-class mail, on which postage has been prepaid and that has been 19
addressed to their last known address, all affected persons listed as property 20
owners in the grand list book of any change in the appraised value of such 21 BILL AS INTRODUCED S.104
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property or any change in the allocation of value to the homestead as defined 1
under subdivision 5401(7) of this title or the housesite as defined under 2
subdivision 6061(11) of this title, and also notify them of the amount of such 3
change and of the time and place fixed in the public notice hereinafter provided 4
for, when persons aggrieved may be heard. No notice shall be required for a 5
change solely to reflect a new use value set by the Current Use Advisory Board 6
or the adjustment of that value by the common level of appraisal. Notices shall 7
be mailed at least 14 days before the time fixed for hearing. Such personal 8
notices shall be given in all towns and cities within the State, anything in the 9
charter of any city to the contrary notwithstanding. At the same time, the 10
listers shall post notices in the town clerk’s office and in at least four other 11
public places in the town or, in the case of a city, in such other manner and 12
places as the city charter shall provide, setting forth that they have completed 13
and filed such book as an abstract and the time and place of the meeting for 14
hearing grievances and making corrections. Unless the personal notices 15
required hereby were sent by registered or certified mail, or unless an official 16
certificate of mailing of the same was obtained from the post office, in the case 17
of any controversy subsequently arising, it shall be presumed that the personal 18
notices were not mailed as required. 19 BILL AS INTRODUCED S.104
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Sec. 20. 32 V.S.A § 4152(a) is amended to read: 1
(a) When completed, the grand list of a town shall be in such form as the 2
Director prescribes and shall contain such information as the Director 3
prescribes, including: 4
* * * 5
(9) Separate columns A separate column that will show what the listed 6
valuations full fair market value of homesteads, as defined in subdivision 7
5401(7) of this title, and housesites as defined under subdivision 6061(11) of 8
this title would be absent the exemption from nonhomestead property tax. 9
Sec. 21. 32 V.S.A. § 4261 is amended to read: 10
§ 4261. CORRECTING OMISSION FROM GRAND LIST 11
When real or personal estate is omitted from the grand list by mistake or an 12
obvious error is found, the listers, with the approval of the selectboard, on or 13
before December 31, may supply such omissions or correct such errors and 14
make a certificate thereon of the fact; provided, however, the listers may make 15
a correction resulting from the filing or rescission of a homestead declaration 16
without approval of the selectboard. 17
Sec. 22. 32 V.S.A. § 5400(c) is amended to read: 18
(c) The statutory purpose of the exemption for qualified housing in 19
subdivision 5404a(a)(6) of this title is to ensure that taxes on this rent- 20
restricted housing provided to Vermonters of low and moderate income are 21 BILL AS INTRODUCED S.104
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more equivalent to property taxed using the State homestead rate and to adjust 1
the costs of investment in rent-restricted housing to reflect more accurately the 2
revenue potential of such property. 3
* * * Municipal Property Tax Credit * * * 4
Sec. 23. 32 V.S.A. chapter 154 is redesignated to read: 5
CHAPTER 154. HOMESTEAD MUNICIPAL PROPERTY TAX CREDIT 6
AND RENTER CREDIT 7
Sec. 24. 32 V.S.A. § 6061 is amended to read: 8
§ 6061. DEFINITIONS 9
As used in this chapter unless the context requires otherwise: 10
(1) “Property Municipal property tax credit” means a credit of the prior 11
tax year’s statewide or municipal property tax liability or a homestead owner 12
credit, as authorized under section 6066 of this title, as the context requires. 13
* * * 14
(6) “Property Municipal property tax” means the amount of ad valorem 15
taxes, exclusive of special assessments, interest, penalties, and charges for 16
service, assessed by a municipality on real property in this State used as the 17
claimant’s housesite, or that would have been assessed if the homestead had 18
been properly declared at the time of assessment. 19
* * * 20 BILL AS INTRODUCED S.104
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(11) “Housesite” means that portion of a homestead, as defined under 1
subdivision 5401(7) of this title but not under subdivision 5401(7)(G) of this 2
title, that includes as much of the land owned by the claimant surrounding the 3
dwelling as is reasonably necessary for use of the dwelling as a home, but in 4
no event more than two acres per dwelling unit, and, in the case of multiple 5
dwelling units, not more than two acres per dwelling unit up to a maximum of 6
10 acres per parcel. [Repealed.] 7
* * * 8
(13) “Homestead” means a homestead as defined under subdivision 9
5401(7) of this title, but not under subdivision 5401(7)(G) of this title, and 10
declared on or before October 15 in accordance with section 5410 6065 of this 11
title. 12
(14) “Statewide education tax rate” means the homestead education 13
property tax rate multiplied by the municipality’s education spending 14
adjustment under subdivision 5402(a)(2) of this title and used to calculate taxes 15
assessed in the municipal fiscal year that began in the taxable year. 16
[Repealed.] 17
(15) “Adjusted property tax” means the amount of education and 18
municipal property taxes on the homestead parcel after reduction for any 19
municipal property tax credit under section 6066a of this chapter. 20 BILL AS INTRODUCED S.104
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(16) “Unadjusted property tax” means the amount of education and 1
municipal property taxes on the homestead parcel before any reduction for a 2
municipal property tax credit under section 6066a of this chapter. 3
(17) “Equalized value of the housesite in the taxable year” means the 4
value of the housesite on the grand list for April 1 of the taxable year, divided 5
by the municipality’s common level of appraisal determined by equalization of 6
the grand list for April 1 of the year preceding the taxable year. [Repealed.] 7
* * * 8
Sec. 25. 32 V.S.A. § 6062 is amended to read: 9
§ 6062. NUMBER AND IDENTITY OF CLAIMANTS; APPORTIONMENT 10
* * * 11
(b) Only one municipal property tax credit claimant per household per year 12
shall be entitled to relief under this chapter. 13
(c) When a homestead is owned by two or more persons as joint tenants, 14
tenants by the entirety, or tenants in common and one or more of these persons 15
are not members of the claimant’s household, the municipal property tax is the 16
same proportion of the property tax levied on that homestead as the proportion 17
of ownership of the homestead by the claimant and members of the claimant’s 18
household; provided, however, that: 19
(1) the municipal property tax of a claimant who is 62 years of age or 20
older is the same proportion of the municipal property tax levied on that 21 BILL AS INTRODUCED S.104
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homestead as the proportion of ownership of the homestead by the claimant, 1
members of the claimant’s household, and the claimant’s descendants, and the 2
claimant’s siblings or spouse who have moved on an indefinite basis from the 3
homestead to a residential care or nursing home and who claim no rebate or 4
credit for such year under this chapter; 5
(2) the municipal property tax of a claimant who is a joint tenant or 6
tenant by the entirety with, and legally separated from, a spouse who is not a 7
member of the household is the tax on the housesite for which the claimant is 8
responsible pursuant to a court-approved settlement agreement; 9
(3) the municipal property tax of a claimant who is a joint tenant with a 10
former spouse and who has possession of the homestead pursuant to the joint 11
owners’ final divorce decree is the municipal property tax for which the 12
claimant is responsible under the joint owners’ final divorce decree or any 13
modifying orders; and 14
(4) if the homestead is a portion of a duplex and all owners of the duplex 15
occupy some portion of the building as their principal residence, the municipal 16
property tax of the claimant shall be that percentage of the total municipal 17
property tax equal to the ratio of the claimant’s principal residence value to the 18
total duplex building value. 19
(d) Whenever a housesite is an integral part of a larger unit such as a farm 20
or a multi-purpose multipurpose or multi-dwelling multidwelling building, 21 BILL AS INTRODUCED S.104
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municipal property taxes paid shall be that percentage of the total municipal 1
property tax as the value of the housesite is to the total value. Upon a 2
claimant’s request, the listers shall certify to the claimant the value of his or 3
her the claimant’s homestead and housesite. 4
* * * 5
Sec. 26. 32 V.S.A. § 6063 is amended to read: 6
§ 6063. CLAIM AS PERSONAL; CREDIT AMOUNT AT TIME OF 7
TRANSFER 8
(a) The right to file a claim under this chapter is personal to the claimant 9
and shall not survive his or her the claimant’s death, but the right may be 10
exercised on behalf of a claimant by his or her the claimant’s legal guardian or 11
attorney-in-fact. When a claimant dies after having filed a timely claim, the 12
municipal property tax credit amount shall be credited to the homestead 13
property tax liability of the claimant’s estate as provided in section 6066a of 14
this title. 15
(b) In case of sale or transfer of a residence, any municipal property tax 16
credit amounts related to that residence shall be allocated to the seller at 17
closing unless the parties otherwise agree. 18 BILL AS INTRODUCED S.104
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Sec. 27. 32 V.S.A. § 6064 is amended to read: 1
§ 6064. CLAIM APPLIED AGAINST OUTSTANDING LI ABILITIES 2
The amount of any municipal property tax credit resulting under this 3
chapter may be applied by the Commissioner, beginning July 1 of the calendar 4
year in which the claim is filed, against any State tax liability outstanding 5
against the claimant. 6
Sec. 28. 32 V.S.A. § 6065 is amended to read: 7
§ 6065. FORMS; TABLES; NOTICES 8
(a) A homestead owner shall declare ownership of a homestead for 9
purposes of the municipal property tax credit. The Commissioner shall adopt 10
rules governing the eligibility requirements for declaring a homestead. In 11
administering this chapter, the Commissioner shall provide suitable claim 12
forms with tables of allowable claims, instructions, and worksheets for 13
claiming a homestead municipal property tax credit. 14
(b) Prior to June 1, the Commissioner shall also prepare and supply to each 15
town in the State notices describing the homestead municipal property tax 16
credit for inclusion in property tax bills. The notice shall be in simple, plain 17
language and shall explain how to file for a property tax credit, where to find 18
assistance filing for a credit, and any other related information as determined 19
by the Commissioner. The notice shall direct taxpayers to a resource where 20
they can find versions of the notice translated into the five most common non-21 BILL AS INTRODUCED S.104
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English languages in the State. A town shall include such notice in each tax 1
bill and notice of delinquent taxes that it mails to taxpayers who own in that 2
town a residential property, without regard for whether the property was 3
declared a homestead pursuant to subdivision 5401(7) of this title. 4
(c) Notwithstanding the provisions of subsection (b) of this section, towns 5
that use envelopes or mailers not able to accommodate notices describing the 6
homestead municipal tax credit may distribute such notices in an alternative 7
manner. 8
Sec. 29. 32 V.S.A. § 6066 is amended to read: 9
§ 6066. COMPUTATION OF MUNICIPAL PROPERTY TAX CREDIT 10
AND RENTER CREDIT 11
(a) An eligible A claimant whose household income does not exceed 12
$47,000.00 and who owned the homestead on April 1 of the year in which the 13
claim is filed shall be entitled to a credit for the prior year’s homestead 14
municipal property tax liability amount determined as follows: in an amount 15
for the upcoming fiscal year that is equal to the amount by which the municipal 16
property taxes for the municipal fiscal year that began in the taxable year upon 17
the claimant’s housesite exceeds a percentage of the claimant’s household 18
income for the taxable year, provided that in no event shall the credit under this 19
subsection exceed the amount of the reduced property tax. The amount of the 20
credit under this subsection shall be determined as follows: 21 BILL AS INTRODUCED S.104
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(1)(A) For a claimant with household income of $130,000.00 or more: 1
(i) the statewide education tax rate, multiplied by the equalized 2
value of the housesite in the taxable year; 3
(ii) minus (if less) the sum of: 4
(I) the income percentage of household income for the taxable 5
year; plus 6
(II) the statewide education tax rate, multiplied by the equalized 7
value of the housesite in the taxable year in excess of $400,000.00. 8
(B) For a claimant with household income of less than $90,000.00 but 9
more than $60,000.00, the statewide education tax rate, multiplied by the 10
equalized value of the housesite in the taxable year, minus (if less) the sum of: 11
(i) the income percentage of household income for the taxable 12
year; plus 13
(ii) the statewide education tax rate, multiplied by the equalized 14
value of the housesite in the taxable year in excess of $1,000,000.00. 15
(C) For a claimant whose household income does not exceed 16
$60,000.00, the statewide education tax rate, multiplied by the equalized value 17
of the housesite in the taxable year, minus the lesser of: 18
(i) the sum of the income percentage of household income for the 19
taxable year plus the statewide education tax rate, multiplied by the equalized 20
value of the housesite in the taxable year in excess of $1,000,000.00; or 21 BILL AS INTRODUCED S.104
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(ii) the statewide education tax rate, multiplied by the equalized 1
value of the housesite in the taxable year reduced by $15,000.00. 2
(2) “Income percentage” in this section means two percent, multiplied by 3
the education income tax spending adjustment under subdivision 5401(13)(B) 4
of this title for the property tax year that begins in the claim year for the 5
municipality in which the homestead residence is located. 6
(3) A claimant whose household income does not exceed $47,000.00 7
shall also be entitled to an additional credit amount from the claimant’s 8
municipal taxes for the upcoming fiscal year that is equal to the amount by 9
which the municipal property taxes for the municipal fiscal year that began in 10
the taxable year upon the claimant’s housesite exceeds a percentage of the 11
claimant’s household income for the taxable year as follows: 12
If household income (rounded then the taxpayer is entitled to 13
to the nearest dollar) is: credit for the reduced property tax in 14
excess of this percent of that income 15
$0.00 — 9,999.00 1.50 16
$10,000.00 — 47,000.00 3.00 17
(4) A claimant whose household income does not exceed $60,000.00 18
shall also be entitled to an additional credit amount from the claimant’s 19
statewide education tax for the upcoming fiscal year that is equal to the amount 20
by which the education property tax for the municipal fiscal year that began in 21 BILL AS INTRODUCED S.104
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VT LEG #381212 v.3
the taxable year upon the claimant’s housesite, reduced by the credit amount 1
determined under subdivisions (1) and (2) of this subsection, exceeds a 2
percentage of the claimant’s household income for the taxable year as follows:3
If household income (rounded then the taxpayer is entitled to 4
to the nearest dollar) is: credit for the reduced property tax in 5
excess of this percent of that income 6
$0.00 — 9,999.00 0.50 7
$10,000 — 24,999.00 1.50 8
$25,000.00 — 46,999.00 2.00 9
$47,000.00 — 60,000.00 lesser of 2.50 10
or town rate 11
(5) In no event shall the credit provided for in subdivision (3) or (4) of 12
this subsection exceed the amount of the reduced property tax. The credits 13
under subdivision (4) of this subsection shall be calculated considering only 14
the tax due on the first $1,000,000.00 in equalized housesite value. 15
* * * 16
(e) Property taxes paid by a cooperative, not including a mobile home park 17
cooperative, allocable to property used as a homestead shall be attributable to 18
the co-op member for the purpose of computing the credit of municipal 19
property tax liability of the co-op member under this section. Property owned 20
by a cooperative declared as a homestead may only include the homestead and 21 BILL AS INTRODUCED S.104
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VT LEG #381212 v.3
a pro rata share of any common land owned or leased by the cooperative, not 1
to exceed the two-acre housesite limitation. The share of the cooperative’s 2
assessed value attributable to the housesite shall be determined by the 3
cooperative and specified annually in a notice to the co-op member. Property 4
taxes paid by a mobile home park cooperative, allocable to property used as a 5
housesite, shall be attributed to the owner of the housesite for the purpose of 6
computing the credit of municipal property tax liability of the housesite owner 7
under this section. Property owned by the mobile home park cooperative and 8
declared as a housesite may only include common property of the cooperative 9
contiguous with at least one mobile home lot in the park, not to exceed the 10
two-acre housesite limitation. The share attributable to any mobile home lot 11
shall be determined by the cooperative and specified in the cooperative 12
agreement. 13
(f) [Repealed.] 14
(g) Notwithstanding subsection (d) of this section, if the land surrounding a 15
homestead is owned by a nonprofit corporation or community land trust with 16
tax exempt status under 26 U.S.C. § 501(c)(3), the homeowner may include an 17
allocated amount as property tax paid on the land with the amount of property 18
taxes paid by the homeowner on the home for the purposes of computation of 19
the credit under this section. The allocated amount shall be determined by the 20
nonprofit corporation or community land trust on a proportional basis. The 21 BILL AS INTRODUCED S.104
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VT LEG #381212 v.3
nonprofit corporation or community land trust shall provide to that 1
homeowner, by January 31, a certificate specifying the allocated amount. The 2
certificate shall indicate the proportion of total property tax on the parcel that 3
was assessed for municipal property tax and for statewide property tax. 4
(h) A homestead owner shall be entitled to an additional property tax credit 5
amount equal to one percent of the amount of income tax refund that the 6
claimant elects to allocate to payment of homestead property tax under section 7
6068 of this title. [Repealed.] 8
* * * 9
Sec. 30. 32 V.S.A. § 6066a is amended to read: 10
§ 6066a. DETERMINATION OF MUNICIPAL PROPERTY TAX CREDIT 11
(a) Annually, the Commissioner shall determine the municipal property tax 12
credit amount under section 6066 of this title, related to a homestead owned by 13
the claimant, based on the prior taxable year’s income and crediting municipal 14
property taxes paid in the prior year. The Commissioner shall notify the 15
municipality in which the housesite is located of the amount of the property tax 16
credit for the claimant for homestead municipal property tax liabilities on a 17
monthly basis. The tax credit of a claimant who was assessed property tax by 18
a town that revised the dates of its fiscal year, however, is the excess of the 19
municipal property tax that was assessed in the last 12 months of the revised 20
fiscal year, over the adjusted property tax of the claimant for the revised fiscal 21 BILL AS INTRODUCED S.104
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VT LEG #381212 v.3
year, as determined under section 6066 of this title, related to a homestead 1
owned by the claimant. 2
(b) The Commissioner shall include in the total property tax credit amount 3
determined under subsection (a) of this section, for credit to the taxpayer for 4
homestead property tax liabilities, any income tax overpayment remaining 5
after allocation under section 3112 of this title and setoff under section 5934 of 6
this title, which the taxpayer has directed to be used for payment of property 7
taxes. [Repealed.] 8
(c) The Commissioner shall notify the municipality of any claim and 9
refund amounts unresolved by November 1 at the time of final resolution, 10
including adjudication, if any; provided, however, that towns will not be 11
notified of any additional credit amounts after November 1 of the claim year, 12
and such amounts shall be paid to the claimant by the Commissioner. 13
(d) [Repealed.] 14
(e) At the time of notice to the municipality, the Commissioner shall notify 15
the taxpayer of the municipal property tax credit amount determined under 16
subdivision subsection 6066(a)(1) of this title, the amount determined under 17
subdivision 6066(a)(3) of this title, any additional credit amounts due the 18
homestead owner under section 6066 of this title, the amount of income tax 19
refund, if any, allocated to payment of homestead property tax liabilities, and 20
any late-claim reduction amount. 21 BILL AS INTRODUCED S.104
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(f)(1) For taxpayers and amounts stated in the notice to towns on or before 1
July 1, municipalities shall create and send to taxpayers a homestead property 2
tax bill, instead of the bill required under subdivision 5402(b)(1) of this title, 3
providing the total amount allocated to payment of homestead education 4
property tax liabilities and notice of the balance due. Municipalities shall 5
apply the amount allocated under this chapter to current year property taxes in 6
equal amounts to each of the taxpayers’ property tax installments that include 7
education taxes. Notwithstanding section 4772 of this title, if a town issues a 8
corrected bill as a result of the notice sent by the Commissioner under 9
subsection (a) of this section, issuance of the corrected new bill does not 10
extend the time for payment of the original bill nor relieve the taxpayer of any 11
interest or penalties associated with the original bill. If the corrected bill is less 12
than the original bill, and there are also no unpaid current year taxes, interest, 13
or penalties, and no past year delinquent taxes or penalties and interest charges, 14
any overpayment shall be reflected on the corrected tax bill and refunded to the 15
taxpayer. 16
(2) For property tax credit amounts for which municipalities receive 17
notice after November 1, municipalities shall issue a new homestead property 18
tax bill with notice to the taxpayer of the total amount allocated to payment of 19
homestead property tax liabilities and notice of the balance due. 20 BILL AS INTRODUCED S.104
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(3) The property tax credit amount determined for the taxpayer shall be 1
allocated first to current year property tax on the homestead parcel, next to 2
current-year homestead parcel penalties and interest, next to any prior year 3
homestead parcel penalties and interest, and last to any prior year property tax 4
on the homestead parcel. No credit shall be allocated to a property tax liability 5
for any year after the year for which the claim or refund allocation was filed. 6
No municipal tax-reduction incentive for early payment of taxes shall apply to 7
any amount allocated to the property tax bill under this chapter. 8
(4) If the property tax credit amount as described in subsection (e) of 9
this section exceeds the property tax, penalties, and interest due for the current 10
and all prior years, the municipality shall refund the excess to the taxpayer, 11
without interest, within 20 days of the first date upon which taxes become due 12
and payable or 20 days after notification of the credit amount by the 13
Commissioner of Taxes, whichever is later. [Repealed.] 14
(g) The Commissioner of Taxes shall pay monthly to each municipality the 15
amount of municipal property tax credit of which the municipality was last 16
notified related to municipal property tax on homesteads within that 17
municipality, as determined by the Commissioner of Taxes. 18 BILL AS INTRODUCED S.104
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Sec. 31. 32 V.S.A. § 6067 is amended to read: 1
§ 6067. CREDIT LIMITATIONS 2
Only one individual per household per taxable year shall be entitled to a 3
municipal property tax credit under this chapter. An individual who received a 4
homestead exemption or credit with respect to property taxes assessed by 5
another state for the taxable year shall not be entitled to receive a credit under 6
this chapter. No taxpayer shall receive a renter credit under subsection 6066(b) 7
of this title in excess of $2,500.00. No taxpayer shall receive a municipal 8
property tax credit under subdivision subsection 6066(a)(3) of this title greater 9
than $2,400.00 or cumulative credit under subdivisions 6066(a)(1)-(2) and (4) 10
of this title greater than $5,600.00. 11
Sec. 32. 32 V.S.A. § 6068 is amended to read: 12
§ 6068. APPLICATION AND TIME FOR FILING 13
(a) A property tax credit claim or request for allocation of an income tax 14
refund to homestead property tax payment shall be filed with the 15
Commissioner on or before the due date for filing the Vermont income tax 16
return, without extension, and shall describe the school district in which the 17
homestead property is located and shall particularly describe the homestead 18
property for which the credit or allocation is sought, including the school 19
parcel account number prescribed in subsection 5404(b) of this title. A renter 20 BILL AS INTRODUCED S.104
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VT LEG #381212 v.3
credit claim shall be filed with the Commissioner on or before the due date for 1
filing the Vermont income tax return, without extension. 2
(b) If the claimant files a claim after October 15 but on or before March 15 3
of the following calendar year, the municipal property tax credit under this 4
chapter: 5
* * * 6
(c) No request for allocation of an income tax refund or for a renter credit 7
claim may be made after October 15. No municipal property tax credit claim 8
may be made after March 15 of the calendar year following the due date under 9
subsection (a) of this section. 10
Sec. 33. 32 V.S.A. § 6070 is amended to read: 11
§ 6070. DISALLOWED CLAIMS 12
A claim shall be disallowed if the claimant received title to his or her the 13
claimant’s homestead primarily for the purpose of receiving benefits under this 14
chapter. 15
* * * Revenue Allocation and Education Payments * * * 16
Sec. 34. 16 V.S.A. § 4001 is amended to read: 17
§ 4001. DEFINITIONS 18
As used in this chapter: 19 BILL AS INTRODUCED S.104
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(1) “Average daily membership” of a school district or, if needed in 1
order to calculate the appropriate homestead education income tax rate, of the 2
municipality as defined in 32 V.S.A. § 5401(9), in any year means: 3
* * * 4
(2) “Equalized grand list” has the same meaning that equalized 5
education property tax grand list has in 32 V.S.A. chapter 135. 6
* * * 7
Sec. 35. 16 V.S.A. § 4025 is amended to read: 8
§ 4025. EDUCATION FUND 9
(a) The Education Fund is established to comprise the following: 10
(1) all revenue paid to the State from the statewide education tax on 11
nonhomestead and homestead property under 32 V.S.A. chapter 135; 12
* * * 13
(10) wind-powered electric generating facilities tax deposited pursuant 14
to 32 V.S.A. § 5402c; and 15
(11) revenues from the short-term rental surcharge under 32 V.S.A. 16
§ 9301; and 17
(12) revenues from the education income tax imposed by 32 V.S.A. 18
chapter 151, subchapter 14. 19
(b) Monies in the Education Fund shall be used for the following: 20
* * * 21 BILL AS INTRODUCED S.104
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(3) To make payments required under 32 V.S.A. § 6066(a)(1) and only 1
that portion attributable to education taxes, as determined by the Commissioner 2
of Taxes, of payments required under 32 V.S.A. § 6066(a)(3). The State 3
Treasurer shall withdraw funds from the Education Fund upon warrants issued 4
by the Commissioner of Finance and Management based on information 5
supplied by the Commissioner of Taxes. The Commissioner of Finance and 6
Management may draw warrants for disbursements from the Fund in 7
anticipation of receipts. All balances in the Fund at the end of any fiscal year 8
shall be carried forward and remain a part of the Fund. Interest accruing from 9
the Fund shall remain in the Fund. [Repealed.] 10
* * * 11
Sec. 36. 32 V.S.A. § 435(b) is amended to read: 12
(b) The General Fund shall be composed of revenues from the following 13
sources: 14
* * * 15
(5) individual income taxes levied pursuant to chapter 151 of this title, 16
except for the education income tax surcharge imposed by section 5962 of this 17
title; 18
* * * 19 BILL AS INTRODUCED S.104
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* * * Application of Education Income Tax to Renters * * * 1
Sec. 37. 32 V.S.A. § 5962 is amended to read: 2
§ 5962. EDUCATION INCOME TAX ON INDIVIDUALS 3
(a) In addition to the personal income tax assessed under section 5822 of 4
this title, there shall be an education income tax imposed each taxable year 5
upon the adjusted gross income earned or received in that year by every 6
individual subject to income taxation under the laws of the United States who 7
is not listed as a renter for that year on a landlord certificate furnished pursuant 8
to section 6069 of this title, in an amount determined by the following tables 9
and adjusted as required under this section and section 5963 of this subchapter. 10
* * * 11
Sec. 38. 32 V.S.A. § 5964 is added to read: 12
§ 5964. EDUCATION INCOME TAX; RENTER CREDIT 13
(a) A resident individual or part-year resident individual shall be entitled to 14
a nonrefundable credit against the tax imposed by section 5962 of this title for 15
the taxable year. The total credit per taxable year shall be 21 percent of gross 16
rent paid by the renter during the taxable year, multiplied by the percentage 17
that the individual’s income that is earned or received during the period of the 18
individual’s residency in this State bears to the individual’s total income. 19 BILL AS INTRODUCED S.104
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VT LEG #381212 v.3
(b) As used in this section, “gross rent” means the rent and related charges 1
paid by the individual for the right to occupy the individual’s primary dwelling 2
as the individual’s domicile in this State during the taxable year. 3
Sec. 39. 16 V.S.A. § 4025 is amended to read: 4
§ 4025. EDUCATION FUND 5
* * * 6
(b) Monies in the Education Fund shall be used for the following: 7
* * * 8
(3) To make payments required under 32 V.S.A. § 5964, as determined 9
by the Commissioner of Taxes. The State Treasurer shall withdraw funds from 10
the Education Fund upon warrants issued by the Commissioner of Finance and 11
Management based on information supplied by the Commissioner of Taxes. 12
The Commissioner of Finance and Management may draw warrants for 13
disbursements from the Fund in anticipation of receipts. All balances in the 14
Fund at the end of any fiscal year shall be carried forward and remain a part of 15
the Fund. Interest accruing from the Fund shall remain in the Fund. 16
* * * 17
* * * Effective Dates * * * 18
Sec. 40. EFFECTIVE DATES 19
(a) This section and Secs. 1–3 (income sensitivity adjustments and new 20
income tax bracket) shall take effect on July 1, 2025. 21 BILL AS INTRODUCED S.104
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(b) Secs. 37–39 (application of education income tax to renters) shall take 1
effect on July 1, 2029. 2
(c) All remaining sections shall take effect on July 1, 2026. 3