S 104

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