H 933

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No. 164. An act relating to miscellaneous administrative and policy
changes to the tax laws.
                                       (H.933)
It is hereby enacted by the General Assembly of the State of Vermont:
      * * * Credit for Taxes Paid in Another State by an S Corporation * * *
Sec. 1. REPEAL
   32 V.S.A. § 5916 (denial of tax credits for S corporations) is repealed.
                          * * * Property Transfer Tax * * *
Sec. 2. 32 V.S.A. § 9602 is amended to read:
§ 9602. TAX ON TRANSFER OF TITLE TO PROPERTY
   A tax is hereby imposed upon the transfer by deed of title to property
located in this State, or a transfer or acquisition of a controlling interest in any
person with title to property in this State. The amount of the tax equals 1.25
percent of the value of the property transferred, or $1.00, whichever is greater,
except as follows:
                                         ***
         (4) Tax shall be imposed at the rate of 3.4 percent of the value of the
property transferred with respect to transfers of residential property:
            (A) residential property that is fit for habitation on a year-round
basis;
            (B) that will not be used as the principal residence of the transferee;
and
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          (C) for which the transferee will not be required to provide a landlord
certificate pursuant to section 6069 of this title.
      (5) If a transfer would have been subject to the tax rate under
subdivision (4) of this section but for the transferee’s filing of a landlord
certificate of rent for which there is no bona fide landlord-tenant relationship
between the parties, the Commissioner shall assess tax at the rate under
subdivision (4) of this section on the transfer. To make this determination, the
Commissioner may consider whether the transferee and tenant are related
parties, whether the transferee charges the tenant fair market rent, whether the
transferee is an entity with a business purpose other than the avoidance of
property transfer tax, and any other factor the Commissioner deems relevant.
                 * * * Current Use; Land Use Change Tax * * *
Sec. 3. 32 V.S.A. § 3757 is amended to read:
§ 3757. LAND USE CHANGE TAX
   (a) Land that has been classified as agricultural land or managed forestland
pursuant to this chapter shall be subject to a land use change tax upon the
development of that land, as defined in section 3752 of this chapter. The tax
shall be at the rate of 10 percent of the full fair market value of the changed
land determined without regard to the use value appraisal. If changed land is a
portion of a parcel, the fair market value of the changed land shall be the fair
market value of the changed land as a separate parcel, divided by the common
level of appraisal. Such fair market value shall be determined as of the date
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the land is no longer eligible for use value appraisal. This tax shall be in
addition to the annual property tax imposed upon such property. Nothing in
this section shall be construed to require payment of an additional land use
change tax upon the subsequent development of the same land, nor shall it be
construed to require payment of a land use change tax merely because
previously eligible land becomes ineligible, provided no development of the
land has occurred.
   (b) Any owner of eligible land who wishes to withdraw land from use
value appraisal shall notify the Director, who shall in turn notify the local
assessing official. In the alternative, if the Director determines that
development has occurred, the Director shall notify the local assessing official
of his or her the Director’s determination. Thereafter, land that has been
withdrawn or developed shall be appraised and listed at its full fair market
value in accordance with the provisions of chapter 121 of this title and
subsection 3756(d) of this title, according to the appraisal model and land
schedule of the municipality.
   (c) For the purposes of the land use change tax, the determination of the
fair market value of the land shall be made by the local assessing officials in
accordance with the provisions of subsection (b) of this section and divided by
the municipality’s most recent common level of appraisal as determined by the
Director. The determination shall be made within 30 days after the Director
notifies the local assessing officials of the date that the owner has petitioned
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for withdrawal from use value appraisal or that the Director or local assessing
official has determined that development has occurred. The local assessing
officials shall notify the Director and the owner of their determination, and the.
Failing a determination of the fair market value of the withdrawn portion of the
parcel by the local assessing officials within 30 days as required under this
subsection, the Director shall establish the fair market value of the changed
land and notify the local assessing officials and the owner of the Director’s
determination within 30 days. The provisions for appeal relating to property
tax assessments in chapter 131 of this title shall apply, except that the owner
shall have 30 days to appeal the determination to the municipality or to the
Director as applicable under this subsection. If an owner erroneously appeals a
municipality’s determination to the Director, the Director may forward the
appeal to the municipality and, provided the appeal to the Director is made
within 30 days as permitted under this subsection, the appeal shall be
considered timely filed to the municipality.
   (d) The land use change tax shall be due and payable by the owner 30 days
after the tax notice is mailed to the taxpayer owner. The tax shall be paid to
the Commissioner, who, if the municipality’s local assessing officials timely
determine fair market value of the withdrawn portion of the parcel pursuant to
subsection (c) of this section, shall remit to the municipality the lesser of one-
half the tax paid or $2,000.00. The Director and shall deposit three-quarters of
the remainder of the tax paid in the Education Fund, and one-quarter of the
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remainder of the tax paid in the General Fund. If the municipality’s local
assessing officials fail to timely determine fair market value of the withdrawn
portion of the parcel pursuant to subsection (c) of this section, the municipality
shall forfeit any tax paid and the Commissioner shall deposit three-quarters of
the tax paid in the Education Fund, and one-quarter of the tax paid in the
General Fund. The Commissioner shall issue a form to the assessing officials
that shall provide for a description of the land developed, the amount of tax
payable, and the fair market value of the land at the time of development or
withdrawal from use value appraisal. The owner shall fill out the form and
shall sign it under the penalty of perjury. After receipt of the completed and
signed form, the Commissioner shall furnish the owner with one copy, shall
retain one copy, and shall forward one copy to the local assessing officials, one
copy to the register of deeds of the municipality in which the land is located,
and one copy to the Secretary of Agriculture, Food and Markets if the land is
agricultural land and in all other cases to the Commissioner of Forests, Parks
and Recreation.
                                      ***
Sec. 4. 32 V.S.A. § 3758(b) is amended to read:
   (b) Any owner who is aggrieved by the determination of the fair market
value of classified land for the purpose of computing the land use change tax
may appeal in the same manner as an appeal of a grand list valuation under this
title, except that the owner shall have 30 days to appeal the determination to
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the municipality or to the Director as applicable under subsection 3757(c) of
this chapter.
Sec. 4a. 32 V.S.A. § 3755(b)(2) is amended to read:
      (2) A management report of whatever activity has occurred, signed by
the an owner or forester working on behalf of an owner, has been filed with the
Department of Taxes’ Director of Property Valuation and Review on or before
February 1 of the year following the year when the management activity
occurred.
Sec. 4b. 32 V.S.A. § 4463 is amended to read:
§ 4463. OBJECTIONS TO APPEAL
   When a taxpayer, an agent designated by the legislative body of the town,
or selectboard claims that an appeal to the Director is in any manner defective
or was not lawfully taken, on or before 14 30 days after mailing of the notice
of appeal by the clerk under Rule 74(b) of the Vermont Rules of Civil
Procedure receipt of the appeal by the Director, the taxpayer, town agent, or
selectboard shall file objections in writing with the Director, and furnish the
appellant or appellant’s attorney with a copy of the objections. When the
taxpayer, agent, or selectboard so requests, the Director shall thereupon fix a
time and place for hearing the objections, and shall notify all parties thereof, by
mail or otherwise. Upon hearing or otherwise, the Director shall pass upon the
objections and make such order in relation thereto as is required by law. The
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order shall be recorded or attached in the town clerk’s office in the book
wherein the appeal is recorded.
Sec. 4c. REPEAL; GRAND LIST CONTENTS
   2025 Acts and Resolves No. 73, Sec. 60 (grand list contents) is repealed.
              * * * Municipal Grand List Stabilization Program * * *
Sec. 5. 32 V.S.A. § 3710(c) is amended to read:
   (c) Upon notification by the Commissioner of Public Safety, the
Commissioner of Taxes shall certify the payment amounts and make an annual
payment to each municipality for each eligible property to compensate for the
loss of municipal property tax. The payment shall be calculated using the
grand list value of the acquired property for the year during which the property
was either damaged by flooding or identified as flood-prone by the
Commissioner of Public Safety, multiplied by the municipal tax rate, including
any submunicipal tax rates, in effect each in the immediately preceding year.
This payment shall be made on or before January 1 of each year for five years.
                * * * Communications Property; Inventories * * *
Sec. 6. 32 V.S.A. § 3602b is amended to read:
§ 3602b. COMMUNICATIONS PROPERTY
   (a) All communications property shall be set in the grand list as real estate.
   (b) Communications property owned by a nonmunicipal communications
service provider shall be taxed at appraisal value as defined in section 3481 of
this title.
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   (c) As used in this section, “communications property” means tangible
personal property used to enable the real-time, two-way, electromagnetic
transmission of information, such as audio, video, and data, that is so fitted and
attached as to be part of a local, state, national, or international
communications network, as well as facilities that are part of a cable television
system as defined in 30 V.S.A. § 501(2). The term includes wires, cables,
conduit, pipes, antennas, poles, and wireless towers. The term does not include
property used solely for one-way, broadcast radio or television transmission
serving the general public and owned and operated by a licensed broadcaster.
   (d)(1) On or before May 1 of each year, the Division of Property Valuation
and Review of the Department of Taxes shall provide the listers in each
municipality with the valuation of all taxable communications property of any
communications service provider situated therein as reported by such provider
to the Division.
      (2) On or before March 31 of each year, each communications service
provider shall submit to the Division a sworn inventory of all its taxable
communications property in a form that identifies the valuation of its property
in each municipality. If the communications service provider fails to submit
the inventory on or before April 15 and in the form prescribed, the
Commissioner may fine the provider not more than $100.00 for each violation,
unless the provider’s failure is due to factors beyond the provider’s control.
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      (3) The Division shall prescribe the form of the inventory required under
subdivision (2) of this subsection and the officer or officers who shall submit
the sworn inventory. If a communications service provider willfully omits to
make, swear to, and submit an inventory, or to answer any interrogatory
therein, or makes a false answer or statement therein, then the Division shall
ascertain the amount and fair market value of the provider’s communications
property using the best information available to the Division. In addition to the
fine under subdivision (2) of this subsection, the provider shall be barred from
any statutory appeal under this chapter or chapter 129 or 131 of this title of the
value set by the Division under this subdivision.
      (4) The valuations provided to the listers pursuant to this section shall be
used by the listers in determining and fixing the valuations of communications
property for the purposes of property taxation.
                          * * * Equalization Study * * *
Sec. 7. 32 V.S.A. § 5405(a) is amended to read:
   (a) Annually, on or before April 1, the Commissioner shall determine the
equalized education property tax grand list and coefficient of dispersion for
each municipality in the State; provided, however, that for purposes of
equalizing grand lists pursuant to this section, the equalized education property
tax grand list of a municipality that establishes a tax increment financing
district or a housing development site under 24 V.S.A. chapter 53, subchapter
7 shall include the fair market value of the property in the district or site and
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not the original taxable value of the property, and further provided that the
unified towns and gores of Essex County may be treated as one municipality
for the purpose of determining an equalized education property grand list and a
coefficient of dispersion, if the Director determines that all such entities have a
uniform appraisal schedule and uniform appraisal practices.
Sec. 8. 32 V.S.A. § 5406 is amended to read:
§ 5406. NOTICE OF FAIR MARKET VALUE AND COEFFICIENT OF
          DISPERSION
                                       ***
   (c) If the Director of Property Valuation and Review certifies that a
municipality has completed a townwide reappraisal, the common level of
appraisal for that municipality shall be equal to its new grand list value divided
by its most recent equalized grand list value 100 percent, for purposes of
determining education property tax rates.
                  * * * Health IT Fund Sunset Extension * * *
Sec. 9. 2013 Acts and Resolves No. 73, Sec. 60(10), as amended by 2017 Acts
and Resolves No. 73, Sec. 14, 2018 Acts and Resolves No. 187, Sec. 5, 2019
Acts and Resolves No. 71, Sec. 21, 2021 Acts and Resolves No. 73, Sec. 14,
2023 Acts and Resolves No. 78, Sec. E.306.1, and 2024 Acts and Resolves No.
144, Sec. 11, is further amended to read:
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        (10) Secs. 48–51 (health care claims tax) shall take effect on July 1,
2013, and Sec. 52 (Health IT-Fund; sunset) shall take effect on July 1, 2026
2031.
Sec. 10. 2019 Acts and Resolves No. 6, Sec. 105, as amended by 2019 Acts
and Resolves No. 71, Sec. 19, 2022 Acts and Resolves No. 83, Sec. 75, 2023
Acts and Resolves No. 78, Sec. E.306.2, and 2024 Acts and Resolves No. 144,
Sec. 12, is further amended to read:
   Sec. 105. EFFECTIVE DATES
                                        ***
   (b) Sec. 73 (further amending 32 V.S.A. § 10402) shall take effect on July
1, 2026 2031.
                                        ***
                        * * * Inflation Index Updates * * *
Sec. 11. 16 V.S.A. § 559(e)(7) is amended to read:
        (7) Nothing in this section shall require a school board or supervisory
union board to invite or advertise for bids if it is renewing a contract entered
into pursuant to subsection (a) of this section, provided that:
           (A) annual costs will not increase more than the most recent New
England Economic Project Cumulative Price Index National Income and
Product Accounts (NIPA) implicit price deflator, as of November 15, for State
state and local government purchases of goods and services, consumption
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expenditures and gross investment published by the U.S. Department of
Commerce, Bureau of Economic Analysis;
          (B) the total amount of the contract does not exceed an increase of 30
percent more than the total amount of the original contract,; and
          (C) the contract for the renewal period allows termination by the
board following an annual review of performance.
Sec. 12. 16 V.S.A. § 2959a(d) is amended to read:
   (d) If the amount of Medicaid reimbursement funds received for services
provided in the prior State fiscal year exceeds $25,000,000.00, in addition to
the 50 percent of the funds paid to supervisory unions submitting Medicaid
bills, 25 percent of the amounts in excess of the $25,000,000.00 shall be paid
into an incentive fund created in the Agency of Education. These funds shall
be used for an incentive payment to supervisory unions with student
participation rates of over 80 percent in accordance with a formula to be
developed by the Agency, in consultation with the Vermont Superintendents
Association. For any incentive payments made subsequent to fiscal year 2007,
the $25,000,000.00 threshold of this subsection shall be increased by the
percentage increase of the most recent New England Economic Project
Cumulative Price Index National Income and Product Accounts (NIPA)
implicit price deflator, as of November 15, for state and local government
purchases of goods and services consumption expenditures and gross
investment published by the U.S. Department of Commerce, Bureau of
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Economic Analysis, from fiscal year 2005 through the fiscal year for which the
payment is being determined, plus an additional one-tenth of one percent.
Sec. 13. 16 V.S.A. § 4011(b) is amended to read:
   (b) For each fiscal year, the base education amount shall be $6,800.00,
increased by the most recent New England Economic Project Cumulative Price
Index National Income and Product Accounts (NIPA) implicit price deflator,
as of November 15, for state and local government purchases of goods and
services consumption expenditures and gross investment published by the U.S.
Department of Commerce, Bureau of Economic Analysis, from fiscal year
2005 through the fiscal year for which the amount is being determined, plus an
additional one-tenth of one percent.
Sec. 14. 32 V.S.A. § 5401(12)(B) is amended to read:
          (B) In excess of 118 percent of the statewide average district per
pupil education spending increased by inflation, as determined by the Secretary
of Education on or before November 15 of each year based on the passed
budgets to date. As used in this subdivision, “increased by inflation” means
increasing the statewide average district per pupil education spending for fiscal
year 2025 by the most recent New England Economic Project cumulative price
index National Income and Product Accounts (NIPA) implicit price deflator, as
of November 15, for state and local government purchases of goods and
services consumption expenditures and gross investment published by the U.S.
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Department of Commerce, Bureau of Economic Analysis, from fiscal year
2025 through the fiscal year for which the amount is being determined.
          * * * Homestead Declaration and Property Tax Credit * * *
Sec. 15. 32 V.S.A. § 6062(c) is amended to read:
   (c) When a homestead is owned by two or more persons as joint tenants,
tenants by the entirety, or tenants in common and one or more of these persons
are not members of the claimant’s household, the property tax is the same
proportion of the property tax levied on that homestead as the proportion of
ownership of the homestead by the claimant and members of the claimant’s
household; provided, however, that:
                                      ***
      (3) the property tax of a claimant who is a joint tenant with a former
spouse and who has possession of the homestead pursuant to the joint owners’
final divorce decree is the property tax for which the claimant is responsible
under the joint owners’ final divorce decree or any modifying orders; and
      (4) if the homestead is a portion of a duplex and all owners of the duplex
occupy some portion of the building as their principal residence, the property
tax of the claimant shall be that percentage of the total property tax equal to the
ratio of the claimant’s principal residence value to the total duplex building
value; and
      (5) the property tax of a claimant who is a joint tenant or tenant by the
entirety with a spouse who is not a member of the household, and who is party
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to a divorce or separation proceeding in a court of law, shall be 100 percent of
the property tax.
                             * * * Estate Tax * * *
Sec. 16. 32 V.S.A. § 7444(a) is amended to read:
   (a) An executor shall submit a Vermont estate tax return to the
Commissioner, on a form prescribed by the Commissioner, when a decedent
has an interest in property with a situs in Vermont and one or both of the
following apply:
      (1) a federal estate tax return is required to be filed under 26 U.S.C.
§ 6018; or
      (2) the sum of the federal gross estate and federal adjusted taxable gifts,
as defined in 26 U.S.C. § 2001(b), made within two years of the date of the
decedent’s death exceeds $2,750,000.00 $5,000,000.00.
Sec. 17. 32 V.S.A. § 5930u(h) is amended to read:
   (h) Credit allocation; Down Payment Assistance Program.
      (1) In fiscal year 2016 through fiscal year 2019, the allocating agency
may award up to $125,000.00 in total first-year credit allocations for loans
through the Down Payment Assistance Program created in subdivision (b)(2)
of this section.
      (2) In fiscal year 2020 through fiscal year 2026, the allocating agency
may award up to $250,000.00 in total first-year credit allocations for loans
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through the Down Payment Assistance Program created in subdivision (b)(3)
of this section.
      (3) In fiscal year 2027 through fiscal year 2031, the allocating agency
may award up to $350,000.00 in total first-year credit allocations for loans
through the Down Payment Assistance Program created in subdivision (b)(3)
of this section.
              * * * Federal Tax Credit for SGO Contributions * * *
Sec. 18. FINDINGS
   The General Assembly finds:
      (1) Section 25F of the Internal Revenue Code creates a new federal
program to subsidize scholarships for expenses at public and private schools.
      (2) Under the terms of the statute, states may voluntarily elect to
participate in the program, or they may decline to participate.
      (3) The decision concerning whether or not to participate in the program
is to be made by “the Governor of the State or by such other individual,
agency, or entity as is designated under State law to make such elections on
behalf of the State with respect to Federal tax benefits.”
Sec. 19. 3 V.S.A. § 24 is added to read:
§ 24. GOVERNOR’S LIST OF SCHOLARSHIP GRANTING
      ORGANIZATIONS
   (a) Annually on December 1, the Governor or designee may elect to
provide a list of organizations that satisfy the conditions of subsection (b) of
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this section to the U.S. Secretary of the Treasury for purposes of making the
federal qualified elementary and secondary education scholarship tax credit
available for Vermont taxpayers under 26 U.S.C. § 25F. It shall be presumed
that an organization listed in the previous year will be listed in the subsequent
year unless the Governor finds that the organization has failed to meet the
requirements of this section.
   (b) An organization shall not be listed unless the organization meets the
following criteria:
      (1) it qualifies as a “scholarship granting organization” as defined under
26 U.S.C. § 25F(c)(5);
      (2) it is a nonprofit organization with the core mission of providing
educational opportunities to economically underprivileged students through
afterschool programs, summer programs, tutoring, and similar programs;
      (3) all grants and scholarships provided by the organization are to
students attending a public school, as defined in 16 V.S.A. § 11(a)(7), or an
independent school, as defined in 16 V.S.A. § 11(a)(8), that is also capable of
receiving public tuition;
      (4) all grants and scholarships provided by the organization are for
students to attend a program offered by a program provider that has entered
into a memorandum of understanding pursuant to subsection (c) of this section
with a public school, as defined in 16 V.S.A. § 11(a)(7); an independent
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school, as defined in 16 V.S.A. § 11(a)(8), that is also capable of receiving
public tuition; or a school district, as defined in 16 V.S.A. § 11(a)(10); and
      (5) when determining whether to award a scholarship, the organization
does not discriminate against any student because of race, color, religion,
ancestry, national origin, sex, sexual orientation, gender identity, place of birth,
crime victim status, or age or against a student with a disability, as that term is
defined under 21 V.S.A. § 495d(5).
   (c) The memorandum of understanding between a program provider and
school required under subdivision (b)(4) of this section shall include
verification that the program provider offers a program that:
      (1) is for after school, during a school break, for supplemental tutoring,
or similar;
      (2) is educational in nature; and
      (3) does not discriminate against any student because of race, color,
religion, ancestry, national origin, sex, sexual orientation, gender identity,
place of birth, crime victim status, or age or against a student with a disability,
as that term is defined under 21 V.S.A. § 495d(5).
   (d) Annually, on or before January 15, each scholarship granting
organization listed pursuant to subsection (a) of this section in the previous
calendar year shall provide a report to the House and Senate Committees on
Education providing the following information relating to activity in the
previous year:
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      (1) the total amount provided in scholarships under this section;
      (2) the total number of scholarships provided under this section;
      (3) the total number of scholarship recipients;
      (4) a complete list of afterschool programs, summer programs, tutoring,
and similar programs that scholarship recipients attended using scholarship
funds provided by the organization and the amount of scholarship funds
received by each program;
      (5) the total number of individuals who made donations to the
organization, including the zip code of each individual donor;
      (6) the total amount of money received as donations;
      (7) the total amount spent on administrative costs with a description of
those administrative costs and an accounting of any unspent funds currently
held; and
      (8) a list identifying all employees, officers, and board members of the
organization that includes, for every individual, the name of the position held
and compensation received.
   (e) In the Governor’s discretion, the Governor may audit an organization
seeking placement on the list, or a program receiving scholarship funds under
this section, to ensure the organization meets all the requirements for
placement as provided by this section and applicable federal law. The
Governor shall not list an organization that the Governor knows is not in
compliance with the requirements of this section or 26 U.S.C. § 25F(c)(5).
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   (f)(1) If the Attorney General finds that any provision of this act is
rendered invalid due to a federal act, federal agency rule, or court of competent
jurisdiction, the Attorney General shall submit written notice of the
invalidation to the Governor, the Speaker of the House, and the President Pro
Tempore of the Senate that the provision is invalid.
      (2) Upon receipt of the notice provided under subdivision (1) of this
subsection, neither the Governor nor the Governor’s designee shall provide a
list of organizations to the U.S. Secretary of the Treasury under subsection (a)
of this section until the General Assembly has enacted legislation addressing
the invalidated provision.
                         * * * Definition of Parcel * * *
Sec. 20. 32 V.S.A. § 4152(a)(3) is amended to read:
      (3) A brief description of each parcel of taxable real estate in the town.
“Parcel” means all contiguous land in the same ownership, together with all
improvements thereon, except for purposes of mapping and per parcel
payments under subsections 4041a(a) and 5405(f) of this title, for which
“parcel” means a separate and sellable lot or piece of real estate.
                                      ***
            * * * Department of Fish and Wildlife Fee Setting * * *
Sec. 21. 10 V.S.A. § 4132 is amended to read:
§ 4132. GENERAL DUTIES OF COMMISSIONER
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   (a) The Commissioner shall have charge of the enforcement of the
provisions of this part.
                                      ***
   (e)(1) The Commissioner, subject to the direction and approval of the
Secretary, shall adopt and publish rules in the name of the Agency for
reasonable fees or charges for the use of the lands, roads, buildings, other
property, and the use of and tuition for the Green Mountain Conservation
Camps, notwithstanding 32 V.S.A. § 603. Notwithstanding 32 V.S.A. § 603
and with the approval of the Secretary, the Commissioner may:
          (A) issue licenses for the long-term use of Department of Fish and
Wildlife lands for research, academic study, commercial use, or use by
regulated utilities; and
          (B) set the tuition for the Green Mountain Conservation Camps.
      (2) The Commissioner shall adopt by rule the fees to be charged for
licenses and tuition authorized under this subsection. The Commissioner is
prohibited from adopting by rule a requirement that an individual possess a
license or permit in order to access lands owned or controlled by the
Department of Fish and Wildlife.
      (3) Fees collected for the use of fish and wildlife lands and properties
under this subsection shall be deposited in the Fish and Wildlife Fund.
      (4) As used in this subsection, “license” means a written instrument
issued by the Commissioner that authorizes research, academic study,
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commercial use, or use by regulated utilities on Department lands but does not
vest the licensee with any property rights.
                                      ***
Sec. 22. REPEAL; COMMISSIONER OF FISH AND WILDLIFE RULE ON
          FEES FOR THE USE OF FISH AND WILDLIFE DEPARTMENT
          LANDS AND FACILITIES
   Notwithstanding 3 V.S.A. § 848, Commissioner of Fish and Wildlife Rule
2008-01, CVR 12-010-075, Fees for the Use of Fish and Wildlife Department
Lands and Facilities will remain in effect through June 30, 2027, and will be
repealed on July 1, 2027.
Sec. 23. DEPARTMENT OF FISH AND WILDLIFE REPORT ON FEES
   On or before January 15, 2027, the Commissioner of Fish and Wildlife shall
submit to the House Committee on Ways and Means and the Senate
Committee on Finance recommended fees to be charged for the use of the
lands, roads, buildings, or other property owned or controlled by the
Department of Fish and Wildlife so that the General Assembly, consistent with
the requirements of 32 V.S.A. § 603, shall establish the fees by statute for the
service or product provided or regulatory function performed.
                    * * * Grand List Assessment Date * * *
Sec. 24. 24 V.S.A. § 1892(b) is amended to read:
   (b) When adopted by the act of the legislative body of that municipality,
the plan shall be recorded with the municipal clerk and lister or assessor, and
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the creation of the district shall occur at 12:01 a.m. on April January 1 of the
calendar year so voted by the municipal legislative body.
Sec. 25. 24 V.S.A. § 1904(b)(2) is amended to read:
      (2) When adopted by the act of the legislative body of that municipality,
the plan shall be recorded with the municipal clerk and lister or assessor, and
the creation of the district shall occur at 12:01 a.m. on April January 1 of the
calendar year so voted by the municipal legislative body.
Sec. 26. 32 V.S.A. § 3481(1)(B)(iv) is amended to read:
             (iv) a capitalization rate that is typical for the geographic area
determined and published annually prior to April January 1 by the Division of
Property Valuation and Review after consultation with the Vermont Housing
Finance Agency.
Sec. 27. 32 V.S.A. § 3482 is amended to read:
§ 3482. PROPERTY LISTED AT ONE PERCENT
   Except as otherwise provided, all real and personal estate shall be set in the
list at one percent of its listed value on April January 1, of the year of its
appraisal.
Sec. 28. 32 V.S.A. § 3485 is amended to read:
§ 3485. RECORDS TO BE KEPT RELATING TO DEEDS AND
          MORTGAGES
   (a) Annually on April January 1, town municipal clerks shall furnish the
listers with copies of the property tax returns filed by the clerk under section
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9610 of this title relating to deeds that were filed for record during the year
ending on the first day of such month. However, upon request in writing by
the listers, on or before the 15th day of each month, town municipal clerks
shall furnish the listers with copies of the property transfer tax returns to deeds
that were filed for record during the next preceding calendar month.
   (b) Failure on the part of the town municipal clerk to furnish the copies
required under subsection (a) of this section shall not render the town liable in
damages to any person. A town municipal clerk who willfully fails to furnish
the copies required under subsection (a) of this section shall be fined $10.00
for each offense.
Sec. 29. 32 V.S.A. § 3603(a) is amended to read:
   (a) Construction equipment and other personal estate used in the
construction or repair of highways, dams, reservoirs, public utilities, or
buildings shall be listed and taxed on the same basis as other personal estate in
the town in which it is located on April January 1. Such equipment brought
into the State after April January 1 and prior to December 15 of any year shall
be taxed as other personal estate for that year in the town in which it is first
used for a normal full work shift. The owner or person in charge of any
equipment enumerated in this section shall, upon request of the Treasurer or
tax collector of any municipality, present evidence that it has been listed for
tax purposes in a municipality in this State. The Transportation Board and
other State agencies shall insert in all contracts for construction a term by
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which the contractor agrees to pay taxes assessed under this section and section
4151 of this title.
Sec. 30. 32 V.S.A. § 3610(b) is amended to read:
   (b) The listers of each town and the appraisers of each unorganized town
and gore shall list every perpetual lease in a separate record in which shall be
shown as to each lease a brief description of the leased land, the fair market
value of the land as appraised by them, the name of the lessor, the annual rental
payable under the lease, and as of April January 1 of each year the name and
address of the lessee. If for any reason the lease is exempt under subsection
(d) of this section, the reason for the exemption shall be noted.
Sec. 31. 32 V.S.A. § 3618(c)(2) is amended to read:
      (2) “Net book value” of property means the cost less depreciation of the
property as shown on the federal income tax return required to be filed with the
federal authorities on or nearest in advance of April January 1 in any year.
Sec. 32. 32 V.S.A. § 3651 is amended to read:
§ 3651. GENERAL RULE
   Taxable real estate shall be set in the list to the last owner or possessor
thereof on April January 1 in each year in the town, village, school, and fire
district where it is situated.
Sec. 33. 32 V.S.A. § 3691 is amended to read:
§ 3691. GENERAL RULE
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   Taxable tangible personal estate shall be set in the list to the last owner
thereof on April January 1 in each year, in the town, village, school, and fire
district where such property is situated, with the exception that such personal
estate situated within this State owned by persons residing outside the State or
by persons unknown to the listers shall be set in the list to the person having
the same in charge, in the town, village, school, and fire district where the
same is situated and shall be holden for all taxes assessed on such list.
However, tangible personal estate owned by nonresident persons or
corporation, and used in this State by the State or a department or institution
thereof, under lease, contract or other agreement, written or oral, may be set in
the list in the town where so used, to such nonresident owner.
Sec. 34. 32 V.S.A. § 3692(b) is amended to read:
   (b) A trailer coach shall be taxed as real property by the town in which it is
located notwithstanding subsection (a) of this section if it is situated in the
town on the same trailer site or camp site for more than 180 days during the
365 days prior to April January 1. A trailer coach shall not be taxed as real
property if it is stored on property on which the owner resides in another
dwelling as a permanent residence.
Sec. 35. 32 V.S.A. § 3708 is amended to read:
§ 3708. PAYMENTS IN LIEU OF TAXES FOR LANDS HELD BY THE
          AGENCY OF NATURAL RESOURCES
                                       ***
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   (b) The State shall annually pay on or before October 31 to each
municipality a payment in lieu of taxes (PILOT) that shall be the base payment
as set forth under this section, for all ANR land, excluding buildings or other
improvements thereon, as of April January 1 of the current year.
   (c) The State shall establish the base payment for all ANR land, excluding
buildings or other improvements thereon, as follows;:
      (1) On on parcels acquired before April 1, 2016, 0.60 percent of the fair
market value as appraised by the Director of Property Valuation and Review as
of April 1 of fiscal year 2015;
      (2) On on parcels acquired on or after April 1, 2016, the municipal tax
rate of the fair market value as assessed on April January 1 in the year of
acquisition by the municipality in which it is located.
                                      ***
Sec. 36. 32 V.S.A. § 3755(b) is amended to read:
   (b) Managed forestland shall be eligible for use value appraisal under this
chapter only if:
      (1) The land is subject to a forest management plan, subject to a
conservation management plan in the case of lands certified under 10 V.S.A.
§ 6306(b), that is filed in the manner and form required by the Department of
Forests, Parks and Recreation and that:
                                      ***
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          (D) Provides for continued conservation management, reserve
forestland management, or forest crop production on the parcel for 10 years.
An initial forest management plan or conservation management plan must be
filed with the Department of Forests, Parks and Recreation on or before
October 1 and shall be effective for a 10-year period beginning the following
April January 1. Prior to expiration of a 10-year plan and on or before April
January 1 of the year in which the plan expires, the owner shall file a new
conservation or forest management plan for the next succeeding 10 years to
remain in the program.
                                     ***
      (2) A management report of whatever activity has occurred, signed by
an owner or forester working on behalf of an owner, has been filed with the
Department of Taxes’ Director of Property Valuation and Review on or before
February 1 of the year following the year when the management activity
occurred.
      (3) There has not been filed with the Director an adverse inspection
report by the Department stating that the management of the tract is contrary to
the forest management plan, conservation management plan, or contrary to the
minimum acceptable standards for forest or conservation management. The
management activity report shall be on a form prescribed by the Commissioner
of Forests, Parks and Recreation in consultation with the Commissioner of
Taxes and shall be signed by all the owners and shall contain the tax
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identification numbers of all the owners. All information contained within the
management activity report shall be forwarded to the Department of Forests,
Parks and Recreation, except for any tax identification number included in the
report. If any owner satisfies the Department that he or she the owner was
prevented by accident, mistake, or misfortune from filing an initial or revised
management plan that is required to be filed on or before October 1, or a
management plan update that is required to be filed on or before April January
1 of the year in which the plan expires, or a management activity report that is
required to be filed on or before February 1 of the year following the year
when the management activity occurred, the owner may submit that
management plan or management activity report at a later date; provided,
however, no initial or revised management plan shall be received later than
December 31, and no management plan update shall be received later than one
year after April January 1 of the year the plan expires, and no management
activity report shall be received later than March 1.
Sec. 37. 32 V.S.A. § 3802a is amended to read:
§ 3802a. REQUIREMENT TO PROVIDE INSURANCE INFORMATION
   Before April January 1 of each year, owners of property exempt from
taxation under subdivisions 3802(4), (6), (9), (12), and (15) and under
subdivisions 5401(10)(D), (F), (G), and (J) of this title shall provide their local
assessing officials with information regarding the insurance replacement cost
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of the exempt property or with a written explanation of why the property is not
insured.
Sec. 38. 32 V.S.A. § 3850(d) is amended to read:
   (d) If a dwelling unit is certified as blighted under subsection (b) of this
section, the exemption shall take effect on the April January 1 following the
certification of the dwelling unit.
Sec. 39. 32 V.S.A. § 4001(a) is amended to read:
   (a) Annually on April January 1, at the expense of the State, the Director
shall furnish to the several town municipal clerks and boards of appraisers for
unorganized towns and gores inventory forms sufficient in number to meet the
requirements of this chapter. Such forms shall be formulated by the Director
and, among other things, shall contain suitable interrogatories requiring each
taxpayer to furnish therein a brief statement of all of each taxpayer’s taxable
property, real and personal, and such other information, including income and
expense information with respect to any income-producing properties, as will
enable the listers or appraisers to appraise such part thereof as is required by
law to be by them appraised, and to make up the abstract of individual lists and
grand list in the manner prescribed by law.
Sec. 40. 32 V.S.A. § 4004 is amended to read:
§ 4004. RETURN OF INVENTORIES BY INDIVIDUALS
   On or before April January 20, unless otherwise required, every taxable
person shall procure such inventory form, make full answers to all
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interrogatories therein, subscribe the same, make oath thereto, and deliver or
forward the same to one of the listers in the town wherein such person owns or
possesses property required by law to be set to him or her the person in the
grand list. When notice in writing to file, deliver, or forward such inventory on
or before a given date is delivered by one of the listers to a person, or mailed
postage prepaid to him or her the person at his or her the person’s last known
post office address, such person, within the time therein specified, shall
properly fill out such inventory and deliver or forward the same to one of the
listers, notwithstanding he or she the person may not own or possess property
subject to taxation. Persons taxable only for real estate shall not be required to
file such inventory unless notified so to do as herein provided.
Sec. 41. 32 V.S.A. § 4041 is amended to read:
§ 4041. EXAMINATION OF PROPERTY; APPRAISAL
   On April January 1, the listers and assessors shall proceed to take up such
inventories and make such personal examination of the property that they are
required to appraise as will enable them to appraise it at its fair market value.
When a board of listers is of the opinion that expert advice or assistance is
needed in making any appraisal required by law, it may, with approval of
selectboard the legislative body of the municipality or by vote of the town
municipality, employ such assistance.
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Sec. 42. 32 V.S.A. § 4044 is amended to read:
§ 4044. APPRAISAL OF PERSONALTY ON APRIL JANUARY 1
   Unless otherwise provided, the taxable personal estate contained in the
inventory shall be appraised by the listers at its fair market value on April
January 1.
Sec. 43. 32 V.S.A. § 4045 is amended to read:
§ 4045. APPRAISAL ON OTHER THAN APRIL JANUARY 1
   If any business is normally operated for a period less than 12 consecutive
months and is not in operation on April January 1, an inventory shall be filed
with the listers at least 15 days prior to the anticipated annual suspension of
such business and the stock in trade shall be appraised for the period of
operation so as to represent an average of values of such property during that
period in which the business has been carried on.
Sec. 44. 32 V.S.A. § 4605 is amended to read:
§ 4605. ASSESSMENT WHEN APPRAISAL ON OTHER THAN APRIL
          JANUARY 1
                                      ***
Sec. 45. 32 V.S.A. § 5401(7) is amended to read:
      (7) “Homestead”:
          (A) “Homestead” means the principal dwelling and parcel of land
surrounding the dwelling, owned and occupied by a resident individual as the
individual’s domicile or owned and fully leased on April January 1, provided
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the property is not leased for more than 182 days out of the calendar year or,
for purposes of the renter credit under subsection 6066(b) of this title, is rented
and occupied by a resident individual as the individual’s domicile.
                                       ***
          (G) For purposes of homestead declaration and application of the
homestead property tax rate, “homestead” also means a residence that was the
homestead of the decedent at the date of death and, from the date of death
through the next April January 1, is held by the estate of the decedent and not
rented.
                                       ***
Sec. 46. 32 V.S.A. § 5404a(a)(6) is amended to read:
      (6) An exemption of a portion of the value of a qualified rental unit
parcel. An owner of a qualified rental unit parcel shall be entitled to an
exemption on the education property tax grand list of 10 percent of the grand
list value of the parcel, multiplied by the ratio of square footage of
improvements used for or related to residential rental purposes to total square
footage of all improvements, multiplied by the ratio of qualified rental units to
total residential rental units on the parcel. “Qualified rental units” means
residential rental units that are subject to rent restriction under provisions of
State or federal law but excluding units subject to rent restrictions under only
one of the following programs: Section 8 moderate rehabilitation, Section 8
housing choice vouchers, or Section 236 or Section 515 rural development
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rental housing. A municipality shall allow the percentage exemption under
this subsection upon presentation by the taxpayer to the municipality, by April
January 1, of a certificate of education grand list value exemption obtained
from the Vermont Housing Finance Agency (VHFA). VHFA shall issue a
certificate of exemption upon presentation by the taxpayer of information that
VHFA and the Commissioner shall require. A certificate of exemption issued
by VHFA under this subsection shall expire upon transfer of the building, upon
expiration of the rent restriction, or after 10 years, whichever first occurs;
provided, however, that the certificate of exemption may be renewed after 10
years and every 10 years thereafter if VHFA finds that the property continues
to meet the requirements of this subsection.
Sec. 47. 32 V.S.A. § 5405 is amended to read:
§ 5405. DETERMINATION OF EQUALIZED EDUCATION PROPERTY
          TAX GRAND LIST AND COEFFICIENT OF DISPERSION
   (a) Annually, on or before April 1, the Commissioner shall determine the
equalized education property tax grand list and coefficient of dispersion for
each municipality in the State; provided, however, that for purposes of
equalizing grand lists pursuant to this section, the equalized education property
tax grand list of a municipality that establishes a tax increment financing
district shall include the fair market value of the property in the district and not
the original taxable value of the property, and further provided that the unified
towns and gores of Essex County may be treated as one municipality for the
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purpose of determining an equalized education property grand list and a
coefficient of dispersion, if the Director determines that all such entities have a
uniform appraisal schedule and uniform appraisal practices.
                                       ***
   (c) In determining the fair market value of property that is required to be
listed at fair market value, the Commissioner shall take into consideration
those factors required by section 3481 of this title. The Commissioner shall
value property as of April January 1 preceding the determination and shall take
account of all homestead declaration information available before October 1
each year.
                                       ***
Sec. 48. 32 V.S.A. § 5410 is amended to read:
§ 5410. DECLARATION OF HOMESTEAD
   (a) A homestead owner shall declare ownership of a homestead for
purposes of education property tax.
   (b) Annually, on or before the due date for filing the Vermont income tax
return, without extension, each homestead owner shall, on a form prescribed
by the Commissioner, which shall be verified under the pains and penalties of
perjury, declare the owner’s homestead, if any, as of, or expected to be as of,
April January 1 of the year in which the declaration is made.
                                       ***
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   (d) The Commissioner shall provide a list of homesteads in each town to
the town municipal listers and assessors by May 15. The listers and assessors
shall notify the Commissioner by June 1 of any residences on the
Commissioner’s list that do not qualify as homesteads. The listers and
assessors shall separately identify homesteads in the grand list.
                                      ***
             * * * Municipal Tax Collection; State Oversight * * *
Sec. 49. 32 V.S.A. chapter 133, subchapter 9 is amended to read:
                        Subchapter 9. Delinquent Taxes
§ 5131. SUPERVISION BY DIRECTOR
   The Director shall supervise the collection of delinquent taxes by officials
of towns and other municipal corporations. [Repealed.]
§ 5132. CONFERENCES; BULLETINS; FORMS
   The Director may examine a tax list in the hands of a collector; shall confer
from time to time with collectors, advise them concerning their official duties,
and furnish them printed instructions and directions relating thereto; shall issue
such bulletins as in the Director’s judgment will aid in enforcing the law; and
shall formulate and furnish the necessary forms for the use of officials required
to make returns to the Director. [Repealed.]
§ 5133. MEETINGS OF TAX COLLECTORS
   The Director shall call meetings of collectors of taxes to be held at such
places and at such times as he or she shall designate for the purpose of
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instruction as to the law governing their official duties and concerning the
collection of delinquent taxes. [Repealed.]
§ 5134. FAILURE TO ATTEND MEETINGS; COMPENSATION
   Collectors shall attend all meetings for instruction to which they are
summoned in writing by the Director. When a collector is unable to attend, he
or she shall notify forthwith the Director stating the cause of such inability and,
in his or her discretion, the Director may summon such collector to attend such
other meeting as he or she may designate. Collectors attending such meetings
shall receive therefor from the treasury of their municipality not less than
$10.00 per day and their necessary expenses. [Repealed.]
§ 5135. RETURNS TO DIRECTOR
   Collectors and other officials named in this chapter shall render such
assistance, furnish such information, and make such returns to the Director in
relation to the subject of delinquent taxes and the administration of the law in
reference thereto as he or she may require. [Repealed.]
                                      ***
Sec. 50. [Deleted.]
Sec. 51. [Deleted.]
Sec. 52. [Deleted.]
Sec. 53. [Deleted.]
                         * * * 10-Year Tax Study * * *
Sec. 54. VERMONT 10-YEAR TAX STUDY
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   (a) The Joint Fiscal Office, with assistance from the Office of Legislative
Counsel, and under the direction of the Joint Fiscal Committee, shall conduct a
decennial study of Vermont State taxes.
   (b) In conducting the study, the Joint Fiscal Office shall:
         (1) Starting with 2015, analyze historical trends comparing Vermont
taxes to the tax systems of other states, including a comparison of the
percentage of Vermont revenue from each State-level source to the percentage
of revenue from each state-level source in other states.
         (2) Analyze Vermont’s taxation levels and tax responsibilities per
capita, per income level, and by incidence on typical Vermont families of
varying incomes, and on typical Vermont business enterprises of varying sizes
and types, and analyze trends in the taxpayer revenue bases for various tax
types.
         (3) Analyze and identify any issues or trends relating to tax flight, tax
avoidance, and gaps in enforcement.
         (4) Recommend areas for further research and analysis, including ways
to further research the topics of wealth and income in Vermont’s aging
demographic.
   (c) Based upon the information resulting from the study in subsection (b) of
this section, the Joint Fiscal Office shall, as part of the study or separately,
review income eligibility criteria for various tax provisions and benefit
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programs to assess where potential gaps in eligibility or benefits cliffs may
exist under Vermont’s existing tax laws.
   (d) For purposes of the study conducted under this section, the Department
of Taxes shall provide assistance as requested by the Joint Fiscal Office.
   (e) In fiscal year 2027, $100,000.00 is appropriated from the General Fund
to the Joint Fiscal Office for consultant assistance, data analysis, and other
expenses related to the study conducted under this section. The duty to
implement this section is contingent upon an appropriation of funds in fiscal
year 2027 from the General Fund to the Joint Fiscal Office for the specific
purposes described in this section.
   (f) The Joint Fiscal Office shall submit the Vermont 10-year tax study to
the House Committee on Ways and Means and the Senate Committee on
Finance on or before January 15, 2027.
     * * * Link-Up and Decoupling from Federal Income Tax Laws * * *
Sec. 55. 32 V.S.A. § 5811 is amended to read:
§ 5811. DEFINITIONS
   As used in this chapter unless the context requires otherwise:
                                       ***
      (18) “Vermont net income” means, for any taxable year and for any
corporate taxpayer:
          (A) the taxable income of the taxpayer for that taxable year under the
laws of the United States, without regard to 26 U.S.C. § 168(k), and excluding
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income that under the laws of the United States is exempt from taxation by the
states:
            (i) increased by:
               (I) the amount of any deduction for State and local taxes on or
measured by income, franchise taxes measured by net income, franchise taxes
for the privilege of doing business and capital stock taxes; and
               (II) to the extent such income is exempted from taxation under
the laws of the United States by, the amount received by the taxpayer on and
after January 1, 1986, as interest income from state and local obligations, other
than obligations of Vermont and its political subdivisions, and any dividends
or other distributions from any fund to the extent such dividend or distribution
is attributable to such Vermont State or local obligations;
               (III) the amount of any deduction for a federal net operating
loss; and
               (IV) an amount equal to the bonus depreciation deduction taken
on the taxpayer’s federal income tax return for the taxable year under Section
168(k) or (n) of the Internal Revenue Code;
               (V) for any taxpayer that does not qualify as an eligible
taxpayer, an amount equal to any deduction taken on the taxpayer’s federal
income tax return for the taxable year under 26 U.S.C. § 174A and Pub. L. No.
119-21, 139 Stat. 72 (2025) § 70302(f)(2). For purposes of this subdivision
(V), the term “eligible taxpayer” means any taxpayer (other than a tax shelter
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prohibited from using the cash receipts and disbursements method of
accounting under 26 U.S.C. § 448(a)(3)) that meets the gross receipts test of
26 U.S.C. § 448(c) for the taxable year; and
               (VI) an amount equal to the amount of income deducted under
Section 250 of the Internal Revenue Code for the taxable year to the extent
deducted from net income; and
            (ii) decreased by:
               (I) the “gross-up of dividends” required by the federal Internal
Revenue Code to be taken into taxable income in connection with the
taxpayer’s election of the foreign tax credit;
               (II) the amount of income that results from the required
reduction in salaries and wages expense for corporations claiming the Targeted
Job or WIN credits; and
               (III) any federal deduction or credit that the taxpayer would
have been allowed for the cultivation, testing, processing, or sale of cannabis
or cannabis products as authorized under 7 V.S.A. chapter 33 or 37, but for
26 U.S.C. § 280E;
               (IV) for the taxable year in which the bonus depreciation
deduction is taken on the taxpayer’s federal income tax return under Section
168(k) or (n) of the Internal Revenue Code and for each applicable taxable
year thereafter, an amount equal to the depreciation deduction that would be
allowed on that property if the taxpayer had made the election under Section
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168(k)(7) or (n)(6) of the Internal Revenue Code to not claim depreciation on
that property. In the taxable year that property is sold or otherwise disposed
of, an additional deduction shall be allowed to the extent the amount of
depreciation claimed under Section 168(k) or (n) of the Internal Revenue Code
on that property has not been recovered through the additional deductions
provided under this subdivision (18). The aggregate amount deducted under
this subdivision (18)(A)(ii)(IV) in all taxable years for any one piece of
property shall not exceed the amount of the bonus depreciation deduction taken
on that property on the taxpayer’s federal income tax return under Section
168(k) or (n) of the Internal Revenue Code, or exceed the amount of the
additional modifications taken for that property on the taxpayer’s Vermont
income tax return under subdivision (i)(IV) of this subdivision (18)(A);
               (V) for a taxpayer that does not qualify as an eligible taxpayer
for the taxable year, as defined under subdivision (i)(V) of this subdivision
(18)(A), for the taxable year in which a deduction is taken on the taxpayer’s
federal income tax return under 26 U.S.C. § 174A, or Pub. L. No. 119-21, 139
Stat. 72 (2025) § 70302(f)(2), or both, and for each applicable taxable year
thereafter, an amount equal to the deduction that would be allowed under
26 U.S.C. § 174 applied as those provisions were in effect on December 31,
2024. The aggregate amount deducted under this subdivision (18)(A)(ii)(V) in
all taxable years may not exceed the amount of the deduction taken on that
expenditure on the taxpayer’s federal income tax return under the Internal
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Revenue Code, or exceed the amount of the addition modifications taken on
the taxpayer’s Vermont income tax return under subdivision (i)(V) of this
subdivision (18)(A);
               (VI) for a taxpayer that qualifies as an eligible taxpayer for the
taxable year as defined under subdivision (i)(V) of this subdivision (18)(A) and
has domestic research or experimental expenditures, as defined in 26 U.S.C.
§ 174A, as added by subsection 174A(a), which are paid or incurred in taxable
years beginning after December 31, 2021, and before January 1, 2025, and
which was charged to capital account pursuant to 26 U.S.C. § 174 as those
provisions were in effect on December 31, 2024, and further elected under
Pub. L. No. 119-21, 139 Stat. 72 (2025) § 70302(f)(1) to substitute “December
31, 2021” for “December 31, 2024” as the applicable effective date for certain
provisions in 26 U.S.C. § 174A and accordingly filed an amended federal
return for each taxable year affected by such election, for the tax year
beginning on or after January 1, 2025, and for each applicable taxable year
thereafter, a taxpayer may elect to deduct any remaining unamortized amount
with respect to such expenditures in the first taxable year beginning after
December 31, 2024, or to deduct such remaining unamortized amount with
respect to such expenditures ratably over the two-taxable year period
beginning with the first taxable year beginning after December 31, 2024. The
aggregate amount deducted under this subdivision (A)(ii)(VI) when combined
with any other deduction for the domestic research or experimental
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expenditure allowed pursuant to Vermont’s adoption of the statutes of the
United States relating to the federal income tax under section 5824 of this
chapter in all taxable years may not exceed the amount of the deduction taken
for that expenditure on the taxpayer’s federal income tax return under the
Internal Revenue Code; and
               (VII) for a taxpayer that qualifies as an eligible taxpayer for the
taxable year as defined under subdivision (i)(V) of this subdivision (18)(A) and
has made an addition modification under subdivision (i)(V) in a prior tax year,
an amount equal to the subtraction modification that would have been allowed
in this taxable year under subdivision (A)(ii)(V) of this subdivision (18) but for
the taxpayer’s current status as an eligible taxpayer. The aggregate amount
deducted under this subdivision (18)(A)(ii)(VII) in all taxable years for any
expenditure may not exceed the amount of the deduction taken for that
expenditure on the taxpayer’s federal income tax return under the Internal
Revenue Code, or exceed the amount of the addition modifications taken for
that expenditure on the taxpayer’s Vermont income tax return under
subdivision (i)(V) of this subdivision (18)(A) for expenditures paid or incurred
in taxable years on or after January 1, 2025.
                                      ***
      (21) “Taxable income” means, in the case of an individual, federal
adjusted gross income determined without regard to 26 U.S.C. § 168(k) and:
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          (A) increased by the following items of income (to the extent such
income is excluded from federal adjusted gross income):
            (i) interest income from non-Vermont state and local obligations;
and
            (ii) dividends or other distributions from any fund to the extent
they are attributable to non-Vermont state or local obligations; and
            (iii) an amount equal to the bonus depreciation deduction taken on
the taxpayer’s federal income tax return for the taxable year under Section
168(k) or (n) of the Internal Revenue Code, including any amount of bonus
depreciation deduction carried over on the taxpayer’s federal income tax return
as part of a net operating loss from a prior taxable year that is deducted in the
current taxable year; and
            (iv) for any taxpayer that does not qualify as an eligible taxpayer,
an amount equal to any deduction taken on the taxpayer’s federal income tax
return for the taxable year under 26 U.S.C. § 174A, or Pub. L. No. 119-21, 139
Stat. 72 (2025) § 70302(f)(2), or both, and any amount of these deductions
carried over on the taxpayer’s federal income tax return as part of a net
operating loss from a prior tax year that is deducted in the current taxable year.
For purposes of this subdivision (iv), the term “eligible taxpayer” means any
taxpayer (other than a tax shelter prohibited from using the cash receipts and
disbursements method of accounting under 26 U.S.C. § 448(a)(3)) that meets
the gross receipts test of 26 U.S.C. § 448(c) for the taxable year; and
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          (B) decreased by the following items of income (to the extent such
income is included in federal adjusted gross income):
            (i) income from U.S. government obligations;
            (ii) with respect to adjusted net capital gain income as defined in
26 U.S.C. § 1(h) reduced by the total amount of any qualified dividend
income: either the first $5,000.00 of such adjusted net capital gain income or
40 percent of adjusted net capital gain income from the sale of assets held by
the taxpayer for more than three years, except not adjusted net capital gain
income from:
               (I) the sale of any real estate or portion of real estate used by
the taxpayer as a primary or nonprimary residence; or
               (II) the sale of depreciable personal property other than farm
property and standing timber; or stocks or bonds publicly traded or traded on
an exchange, or any other financial instruments; regardless of whether sold by
an individual or business; and provided that the total amount of decrease under
this subdivision (21)(B)(ii) shall not exceed 40 percent of federal taxable
income or $350,000.00, whichever is less;
            (iii) recapture of State and local income tax deductions not taken
against Vermont income tax;
            (iv) the portion of certain retirement income and federally taxable
benefits received under the federal Social Security Act that is required to be
excluded under section 5830e of this chapter;
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            (v) the amount of any federal deduction or credit that the taxpayer
would have been allowed for the cultivation, testing, processing, or sale of
cannabis or cannabis products as authorized under 7 V.S.A. chapter 33 or 37,
but for 26 U.S.C. § 280E; and
            (vi) the amount of interest paid by a qualified resident taxpayer
during the taxable year on a qualified education loan for the costs of attendance
at an eligible educational institution;
            (vii) for the taxable year in which the bonus depreciation
deduction is taken on the taxpayer’s federal income tax return under Section
168(k) or (n) of the Internal Revenue Code and for each applicable taxable
year thereafter, an amount equal to the depreciation deduction that would be
allowed on that property if the taxpayer had made the election under Section
168(k)(7) or (n)(6) of the Internal Revenue Code to not claim bonus
depreciation on that property. In the taxable year that property is sold or
otherwise disposed of, an additional deduction shall be allowed to the extent
the amount of depreciation claimed under Section 168(k) or (n) of the Internal
Revenue Code on that property has not been recovered through the additional
deductions provided under this subdivision (21). The aggregate amount
deducted under this subdivision (21)(B)(vii) in all taxable years for any one
piece of property shall not exceed the amount of the bonus depreciation
deduction taken on that property on the taxpayer’s federal income tax return
under Section 168(k) or (n) of the Internal Revenue Code, or exceed the
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amount of the addition modifications taken for that property on the taxpayer’s
Vermont income tax return under subdivision (A)(iii) of this subdivision (21);
and
            (viii) for a taxpayer that does not qualify as an eligible taxpayer
for the taxable year, as defined under subdivision (A)(iv) of this subdivision
(21), for the taxable year in which a deduction is taken on the taxpayer’s
federal income tax return under 26 U.S.C. § 174A, or Pub. L. No. 119-21, 139
Stat. 72 (2025) § 70302(f)(2), or both, and for each applicable taxable year
thereafter, an amount equal to the deduction that would be allowed under
26 U.S.C. § 174 applied as those provisions were in effect on December 31,
2024. The aggregate amount deducted under this subdivision (21)(B)(viii) in
all taxable years may not exceed the amount of the deduction taken on that
expenditure on the taxpayer’s federal income tax return under the Internal
Revenue Code, or exceed the amount of the addition modifications taken on
the taxpayer’s Vermont income tax return under subdivision (A)(iv) of this
subdivision (21);
            (ix) for a taxpayer that qualifies as an eligible taxpayer for the
taxable year as defined under subdivision (A)(iv) of this subdivision (21) and
has domestic research or experimental expenditures, as defined in 26 U.S.C.
§ 174A, as added by subsection 174A(a), which are paid or incurred in taxable
years beginning after December 31, 2021, and before January 1, 2025, and
which was charged to capital account pursuant to 26 U.S.C. § 174 as those
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provisions were in effect on December 31, 2024, and elected under Pub. L. No.
119-21, 139 Stat. 72 (2025) § 70302(f)(1) to substitute “December 31, 2021”
for “December 31, 2024” as the applicable effective date for certain provisions
in 26 U.S.C. § 174A and accordingly filed an amended federal return for each
taxable year affected by such election, for the tax year beginning on or after
January 1, 2025, and for each applicable taxable year thereafter, a taxpayer
may elect to deduct any remaining unamortized amount with respect to such
expenditures in the first taxable year beginning after December 31, 2024, or to
deduct such remaining unamortized amount with respect to such expenditures
ratably over the two-taxable year period beginning with the first taxable year
beginning after December 31, 2024. The aggregate amount deducted under
this subdivision (21)(B)(ix) when combined with any other deduction for the
domestic research or experimental expenditure allowed pursuant to Vermont’s
adoption of the statutes of the United States relating to the federal income tax
under section 5824 of this chapter in all taxable years may not exceed the
amount of the deduction taken for that expenditure on the taxpayer’s federal
income tax return under the Internal Revenue Code; and
            (x) for a taxpayer that qualifies as an eligible taxpayer for the
taxable year as defined under subdivision (A)(iv) of this subdivision (21) and
has made an addition modification under subdivision (A)(iv) of this
subdivision (21) in a prior tax year, an amount equal to the subtraction
modification that would have been allowed in this taxable year under
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subdivision (viii) of this subdivision (21)(B) but for the taxpayer’s current
status as an eligible taxpayer. The aggregate amount deducted under this
subdivision (21)(B)(x) in all taxable years for any expenditure may not exceed
the amount of the deduction taken for that expenditure on the taxpayer’s
federal income tax return under the Internal Revenue Code, or exceed the
amount of the addition modifications taken for that expenditure on the
taxpayer’s Vermont income tax return under subdivision (A)(iv) of this
subdivision (21) for expenditures paid or incurred in taxable years on or after
January 1, 2025; and
                                      ***
      (28) “Taxable income” means, in the case of an estate or a trust, federal
taxable income determined without regard to 26 U.S.C. § 168(k) and:
          (A) increased by the following items of income:
            (i) interest income from non-Vermont state and local obligations;
            (ii) dividends or other distributions from any fund to the extent
they are attributable to non-Vermont state or local obligations; and
            (iii) the amount of State and local income taxes deducted from
federal gross income for the taxable year; and
            (iv) an amount equal to the bonus depreciation deduction taken on
the taxpayer’s federal income tax return for the taxable year under Section
168(k) or (n) of the Internal Revenue Code, including any amount of bonus
depreciation deduction carried over on the taxpayer’s federal income tax return
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as part of a net operating loss from a prior tax year that is deducted in the
current taxable year; and
            (v) for any taxpayer that does not qualify as an eligible taxpayer,
an amount equal to any deduction taken on the taxpayer’s federal income tax
return for the taxable year under 26 U.S.C. § 174A or Pub. L. No. 119-21, 139
Stat. 72 (2025) § 70302(f)(2), or both, and any amount of these deductions
carried over on the taxpayer’s federal income tax return as part of a net
operating loss from a prior tax year that is deducted in the current taxable year.
For purposes of this subdivision (v), the term “eligible taxpayer” means any
taxpayer (other than a tax shelter prohibited from using the cash receipts and
disbursements method of accounting under 26 U.S.C. § 448(a)(3)) that meets
the gross receipts test of 26 U.S.C. § 448(c) for the taxable year; and
          (B) decreased by the following items of income:
            (i) income from U.S. government obligations;
            (ii) with respect to adjusted net capital gain income as defined in
26 U.S.C. § 1(h) reduced by the total amount of any qualified dividend
income: either the first $5,000.00 of such adjusted net capital gain income or
40 percent of adjusted net capital gain income from the sale of assets held by
the taxpayer for more than three years, except not adjusted net capital gain
income from:
               (I) the sale of any real estate or portion of real estate used by
the taxpayer as a primary or nonprimary residence; or
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               (II) the sale of depreciable personal property other than farm
property and standing timber; or stocks or bonds publicly traded or traded on
an exchange, or any other financial instruments; regardless of whether sold by
an individual or business; and provided that the total amount of decrease under
this subdivision (28)(B)(ii) shall not exceed 40 percent of federal taxable
income or $350,000.00, whichever is less; and
            (iii) recapture of State and local income tax deductions not taken
against Vermont income tax;
            (iv) for the taxable year in which the bonus depreciation deduction
is taken on the taxpayer’s federal income tax return under Section 168(k) or (n)
of the Internal Revenue Code and for each applicable taxable year thereafter,
an amount equal to the depreciation deduction that would be allowed on that
property if the taxpayer had made the election under Section 168(k)(7) or
(n)(6) of the Internal Revenue Code to not claim bonus depreciation on that
property. In the taxable year that property is sold or otherwise disposed of, an
additional deduction shall be allowed to the extent the amount of depreciation
claimed under Section 168(k) or (n) of the Internal Revenue Code on that
property has not been recovered through the additional deductions provided
under this subdivision (28). The aggregate amount deducted under this
subdivision (28)(B)(iv) in all taxable years for any one piece of property shall
not exceed the amount of the bonus depreciation deduction taken on that
property on the taxpayer’s federal income tax return under Section 168(k) or
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(n) of the Internal Revenue Code, or exceed the amount of the addition
modifications taken on that property on the taxpayer’s Vermont income tax
return under subdivision (A)(iv) of this subdivision (28);
            (v) for a taxpayer that does not qualify as an eligible taxpayer for
the taxable year, as defined under subdivision (A)(v) of this subdivision (28),
for the taxable year in which a deduction is taken on the taxpayer’s federal
income tax return under 26 U.S.C. § 174A, or Pub. L. No. 119-21, 139 Stat. 72
(2025) § 70302(f)(2), or both, and for each applicable taxable year thereafter,
an amount equal to the deduction that would be allowed under 26 U.S.C. § 174
applied as those provisions were in effect on December 31, 2024. The
aggregate amount deducted under this subdivision (v) in all taxable years may
not exceed the amount of the deduction taken on that expenditure on the
taxpayer’s federal income tax return under the Internal Revenue Code, or
exceed the amount of the addition modifications taken on the taxpayer’s
Vermont income tax return under subdivision (A)(v) of this subdivision (28);
            (vi) for a taxpayer that qualifies as an eligible taxpayer for the
taxable year as defined under subdivision (A)(v) of this subdivision (28) and
has domestic research or experimental expenditures, as defined in 26 U.S.C.
§ 174A, as added by subsection 174A(a), which are paid or incurred in taxable
years beginning after December 31, 2021, and before January 1, 2025, and
which was charged to capital account pursuant to 26 U.S.C. § 174 as those
provisions were in effect on December 31, 2024, and elected under Pub. L. No.
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119-21, 139 Stat. 72 (2025) § 70302(f)(1) to substitute “December 31, 2021”
for “December 31, 2024” as the applicable effective date for certain provisions
in 26 U.S.C. § 174A and accordingly filed an amended federal return for each
taxable year affected by such election, for the tax year beginning on or after
January 1, 2025, and for each applicable taxable year thereafter, a taxpayer
may elect to deduct any remaining unamortized amount with respect to such
expenditures in the first taxable year beginning after December 31, 2024, or to
deduct such remaining unamortized amount with respect to such expenditures
ratably over the two-taxable year period beginning with the first taxable year
beginning after December 31, 2024. The aggregate amount deducted under
this subdivision (28)(B)(vi) when combined with any other deduction for the
domestic research or experimental expenditure allowed pursuant to Vermont’s
adoption of the statutes of the United States relating to the federal income tax
under section 5824 of this chapter in all taxable years may not exceed the
amount of the deduction taken for that expenditure on the taxpayer’s federal
income tax return under the Internal Revenue Code; and
            (vii) for a taxpayer that qualifies as an eligible taxpayer for the
taxable year as defined under subdivision (A)(v) of this subdivision (28) and
has made an addition modification under subdivision (A)(v) of this subdivision
(28) in a prior tax year, an amount equal to the subtraction modification that
would have been allowed in this taxable year under subdivision (v) of this
subdivision (28)(B) but for the taxpayer’s current status as an eligible
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taxpayer. The aggregate amount deducted under this subdivision in all taxable
years for any expenditure may not exceed the amount of the deduction taken
for that expenditure on the taxpayer’s federal income tax return under the
Internal Revenue Code, or exceed the amount of the addition modifications
taken for that expenditure on the taxpayer’s Vermont income tax return under
subdivision (A)(v) of this subdivision (28) for expenditures paid or incurred in
taxable years on or after January 1, 2025.
                                     ***
Sec. 55a. 32 V.S.A. § 5811 is amended to read:
§ 5811. DEFINITIONS
   As used in this chapter:
                                      ***
      (21) “Taxable income” means, in the case of an individual, federal
adjusted gross income and:
          (A) increased by the following items of income (to the extent such
income is excluded from federal adjusted gross income):
                                     ***
            (v) an amount equal to any income or gain from the sale or
exchange of qualified small business stock excluded from federal gross income
for the taxable year under Section 1202(a) of the Internal Revenue Code; and
          (B) decreased by the following items of income (to the extent such
income is included in federal adjusted gross income):
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            (i) income from U.S. government obligations;
            (ii)(I) with respect to adjusted net capital gain income as defined
in 26 U.S.C. § 1(h) reduced by the total amount of any qualified dividend
income: either the first $5,000.00 of such adjusted net capital gain income or
40 percent of adjusted net capital gain income from the sale of assets held by
the taxpayer for more than three years, except not adjusted net capital gain
income from:
               (I)(aa) the sale of any real estate or portion of real estate used
by the taxpayer as a primary or nonprimary residence; or
               (II)(bb) the sale of depreciable personal property other than
farm property and standing timber; or stocks or bonds publicly traded or traded
on an exchange, or any other financial instruments; regardless of whether sold
by an individual or business; and provided that the total amount of decrease
under this subdivision (21)(B)(ii) shall not exceed 40 percent of federal taxable
income or $350,000.00, whichever is less;
               (II) notwithstanding the limitation under subdivision (I)(bb) of
this subdivision (ii) relating to “stocks or bonds publicly traded or traded on an
exchange, or any other financial instruments,” gains from the sale or exchange
of qualified small business stock added to taxable income under subdivision
(A)(v) of this subdivision (21) may be decreased pursuant to this subdivision
(ii); accordingly, for the purposes of this subdivision (ii), adjusted net capital
gain income, federal adjusted gross income, and federal taxable income shall
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include any amounts added to a taxpayer’s taxable income pursuant to
subdivision (A)(v) of this subdivision (21); and
                                      ***
      (28) “Taxable income” means, in the case of an estate or a trust, federal
taxable income and:
          (A) increased by the following items of income:
                                      ***
            (vi) an amount equal to any income or gain from the sale or
exchange of qualified small business stock excluded from federal gross income
for the taxable year under Section 1202(a) of the Internal Revenue Code; and
          (B) decreased by the following items of income:
            (i) income from U.S. government obligations;
            (ii)(I) with respect to adjusted net capital gain income as defined
in 26 U.S.C. § 1(h) reduced by the total amount of any qualified dividend
income: either the first $5,000.00 of such adjusted net capital gain income or
40 percent of adjusted net capital gain income from the sale of assets held by
the taxpayer for more than three years, except not adjusted net capital gain
income from:
               (I)(aa) the sale of any real estate or portion of real estate used
by the taxpayer as a primary or nonprimary residence; or
               (II)(bb) the sale of depreciable personal property other than
farm property and standing timber; or stocks or bonds publicly traded or traded
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on an exchange, or any other financial instruments; regardless of whether sold
by an individual or business; and provided that the total amount of decrease
under this subdivision (28)(B)(ii) shall not exceed 40 percent of federal taxable
income or $350,000.00, whichever is less;
               (II) notwithstanding the limitation under subdivision (I)(bb) of
this subdivision (ii) relating to “stocks or bonds publicly traded or traded on an
exchange, or any other financial instruments,” gains from the sale or exchange
of qualified small business stock added to taxable income under subdivision
(A)(vi) of this subdivision (28) may be decreased pursuant to this subdivision
(ii); accordingly, for the purposes of this subdivision (ii), adjusted net capital
gain income, federal adjusted gross income, and federal taxable income shall
include any amounts added to a taxpayer’s taxable income pursuant to
subdivision (A)(vi) of this subdivision (28); and
                                        ***
Sec. 56. 32 V.S.A. § 5822 is amended to read:
§ 5822. TAX ON INCOME OF INDIVIDUALS, TRUSTS, AND ESTATES
                                       ***
   (e) The tax determined under subsections (a) through (d) of this section
shall be reduced by a percentage equal to the portion of adjusted gross income
that is not Vermont income; provided, however, that if a taxpayer’s Vermont
income exceeds the taxpayer’s adjusted gross income, no reduction shall be
made and provided, further, that if a taxpayer has zero or negative Vermont
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income and the taxpayer’s Vermont income computed without regard to the
reductions in subsection 5823(a) of this chapter does not equal or exceed the
taxpayer’s adjusted gross income, no tax shall be due under this section. For
the purposes of this subsection, adjusted gross income means federal adjusted
gross income modified by the additions and subtractions provided for in
subdivisions 5811(21)(A) and (B) of this chapter for an individual, and federal
adjusted gross income modified by the additions and subtractions provided for
in subdivisions 5811(28)(A) and (B) of this chapter for an estate or a trust.
Sec. 57. 32 V.S.A. § 5823 is amended to read:
§ 5823. VERMONT INCOME OF INDIVIDUALS, ESTATES, AND
          TRUSTS
                                      ***
   (b) For any taxable year, the Vermont income of a nonresident individual,
estate, or trust is the sum of the following items of income to the extent they
are required to be included in the federal adjusted gross income of the
individual after the value of those items are modified by the additions and
subtractions provided for in subdivisions 5811(21)(A) and (B) of this chapter
or the gross federal adjusted gross income of an estate or trust after the value of
those items are modified by the additions and subtractions provided for in
subdivisions (28)(A) and (B) of this chapter for that taxable year:
                                      ***
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Sec. 58. 32 V.S.A. § 5930ii is amended to read:
§ 5930ii. RESEARCH AND DEVELOPMENT TAX CREDIT
   (a) A taxpayer of this State shall be eligible for a credit against the tax
imposed under this chapter in an amount equal to 27 75 percent of the amount
of the federal tax credit allowed in the taxable year for eligible research and
development expenditures under 26 U.S.C. § 41(a) that are made within this
State.
   (b) Any unused credit available under subsection (a) of this section may be
carried forward for up to 10 years.
   (c) Each year, on or before January 15, the Department of Taxes shall
publish a list containing the names of the taxpayers who have claimed a credit
under this section during the most recent completed calendar year.
Sec. 59. 32 V.S.A. § 5930ee is amended to read:
§ 5930ee. LIMITATIONS
   Beginning in fiscal year 2010 and thereafter, the State Board may award tax
credits to all qualified applicants under this subchapter, provided that:
         (1) the total amount of tax credits awarded annually, together with sales
tax reallocated under section 9819 of this title, does not exceed $3,000,000.00
$3,500,000.00;
                                        ***
Sec. 60. 32 V.S.A. § 5824 is amended to read:
§ 5824. ADOPTION OF FEDERAL INCOME TAX LAWS
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   The statutes of the United States relating to the federal income tax, as in
effect on December 31, 2024 2025, but without regard to federal income tax
rates under 26 U.S.C. § 1, are hereby adopted for the purpose of computing the
tax liability under this chapter and shall continue in effect as adopted until
amended, repealed, or replaced by act of the General Assembly.
Sec. 61. 32 V.S.A. § 7402(8) is amended to read:
      (8) “Laws of the United States” means the U.S. Internal Revenue Code
of 1986, as amended through December 31, 2024 2025. As used in this
chapter, “Internal Revenue Code” has the same meaning as “laws of the United
States” as defined in this subdivision. The date through which amendments to
the U.S. Internal Revenue Code of 1986 are adopted under this subdivision
shall continue in effect until amended, repealed, or replaced by act of the
General Assembly.
* * * Revenue Deposits; Purchase and Use and Meals and Rooms Taxes * * *
Sec. 62. 16 V.S.A. § 4025 is amended to read:
§ 4025. EDUCATION FUND
   (a) The Education Fund is established to comprise the following:
                                       ***
      (4) 25 29 percent of the revenues from the meals and rooms taxes
imposed under 32 V.S.A. chapter 225;
      (5) one-third 27 percent of the revenues raised from the purchase and
use tax imposed by 32 V.S.A. chapter 219, notwithstanding 19 V.S.A. § 11(1);
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                                      ***
Sec. 63. 32 V.S.A. § 435(b)(7) is amended to read:
      (7) 69 65 percent of the meals and rooms taxes levied pursuant to
chapter 225 of this title;
                      * * * Burlington Waterfront TIF * * *
Sec. 63a. BURLINGTON WATERFRONT TAX INCREMENT
           FINANCING DISTRICT; FINDINGS; INTENT
   (a) The General Assembly finds that:
      (1) 1985 Acts and Resolves No. 87 authorized municipalities to create
tax increment financing districts and to retain municipal tax increment
pursuant to 24 V.S.A. chapter 53, subchapter 5.
      (2) The City of Burlington created the Burlington Waterfront Tax
Increment Financing (TIF) District in the Lake Street area of the City on
January 22, 1996, prior to the creation of the statewide education property tax
in 1997 Acts and Resolves No. 60.
      (3) 1997 Acts and Resolves No. 60, Sec. 45, created a statewide
education property tax and authorized each municipality with an existing tax
increment financing district under 24 V.S.A. chapter 53, subchapter 5, to
expand the existing district by June 30, 1997, and “to collect all state and local
property taxes on properties within the tax increment financing district and
apply those revenues to repayment of debt issued to finance improvements
within the tax increment financing district” (emphasis added). This provision
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authorized the City of Burlington to retain 100 percent of the Burlington
Waterfront TIF District’s municipal and education property tax increment.
      (4) The City of Burlington voted to expand the Burlington Waterfront
TIF District on June 23, 1997, to include property extending along Cherry
Street from Battery Street to Church Street.
      (5) 2009 Acts and Resolves No. 54, Sec. 83, extended the City of
Burlington’s authority to incur indebtedness for the TIF district by five years
beginning January 1, 2010, and tasked the City of Burlington with submitting
to the Joint Fiscal Committee “a proposal for implementation of a payment to
the education fund in lieu of tax increment which would approximate 25
percent of the new incremental education property tax revenue and the
mechanism for payment by the City to the education fund, including payment
dates.”
      (6) The City of Burlington submitted the proposal to the Joint Fiscal
Committee on August 31, 2009, and explained that the payment in lieu of tax
increment was intended to reduce the administrative complexity that would
result from having “two TIF rates and two ‘original taxable bases’ within the
same district.” The proposal provided for a payment to the Education Fund of
25 percent of “the new incremental education property taxes” (emphasis
added) on properties within the Burlington Waterfront TIF District other than
35 Cherry Street and 41 Cherry Street. For these two properties, the City
proposed to retain 100 percent of the property tax increment.
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      (7) The Joint Fiscal Committee approved the City of Burlington’s
proposal on September 10, 2009, and the General Assembly enacted the terms
of the proposal in 2011 Acts and Resolves No. 45, Sec.16. This legislation left
untouched the municipal property tax increment retention percentage.
      (8) 2013 Acts and Resolves No. 80 codified the City of Burlington’s
authorization to use education tax increment financing for the Burlington
Waterfront TIF District at 24 V.S.A. § 1892(d), extended the City’s authority
to incur indebtedness for the TIF district for five years beginning January 1,
2015, and clarified that the extension of the City’s debt incurrence period did
not extend the City’s tax increment retention period.
      (9) 2016 Acts and Resolves No. 134, Sec. 9a, extended the period to
incur indebtedness for an additional one and a half years for three properties
located at 49 Church Street and 75 Cherry Street, as designated on the City of
Burlington’s Tax Parcel Maps as Parcel ID# 044-4-004-000, Parcel ID# 044-4-
004-001, and Parcel ID# 044-4-033-000. For these three properties, the
General Assembly further authorized the City of Burlington to extend the
City’s tax increment retention period until June 30, 2035.
      (10) 2020 Acts and Resolves No. 175, Sec. 29, further extended the
period to incur indebtedness for these same three properties to June 30, 2022,
provided that certain contingencies were met, and clarified that the extension
of the City’s debt incurrence period for these three properties did not extend
the City’s tax increment retention period.
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      (11) 2021 Acts and Resolves No. 73, Sec. 26a, further extended the
period to incur indebtedness for these same three properties to June 30, 2023.
   (b) It is the intent of the General Assembly to clarify that the City of
Burlington may retain State education tax increment and municipal tax
increment until June 30, 2035, consistent with the methodology approved by
the Joint Fiscal Committee on September 10, 2009, for the following three
properties located at 49 Church Street and 75 Cherry Street, as designated on
the City of Burlington’s Tax Parcel Maps:
      (1) Parcel ID# 044-4-004-000;
      (2) Parcel ID# 044-4-004-001; and
      (3) Parcel ID# 044-4-033-000.
   (c) This section shall not be construed to modify the tax increment
retention percentages for the Burlington Waterfront TIF District.
Sec. 63b. ADJUSTMENT OF RETENTION PERCENTAGES
   On or before November 15, 2029, the City of Burlington shall submit an
updated tax increment financing plan for the Burlington Waterfront Tax
Increment Financing (TIF) District to the Vermont Economic Progress
Council. The plan shall include adjustments and updates of appropriate data
and information sufficient for the Council to determine, based on tax increment
financing debt actually incurred and the history of increment generated,
whether the municipal tax increment and State education tax increment
percentages should be continued or adjusted to a lower percentage to be
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retained for the remaining duration of the retention period and still provide
sufficient municipal and State education tax increment to service the remaining
debt.
Sec. 63c. 16 V.S.A. § 4025 is amended to read:
§ 4025. EDUCATION FUND
   (a) The Education Fund is established to comprise the following:
                                      ***
        (4) 29 32.5 percent of the revenues from the meals and rooms taxes
imposed under 32 V.S.A. chapter 225;
        (5) 27 21 percent of the revenues raised from the purchase and use tax
imposed by 32 V.S.A. chapter 219, notwithstanding 19 V.S.A. § 11(1);
                                      ***
Sec. 63d. 32 V.S.A. § 435(b)(7) is amended to read:
        (7) 65 61.5 percent of the meals and rooms taxes levied pursuant to
chapter 225 of this title;
Sec. 63e. LEGISLATIVE INTENT; TRANSPORTATION AND
            EDUCATION FUNDS
   It is the intent of the General Assembly, in future fiscal years, to gradually
shift additional revenue generated by the motor vehicle purchase and use tax to
the Transportation Fund. It is further intended that any future changes
resulting in a decrease of revenues deposited in the Education Fund be
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accompanied by other revenue policy measures that mitigate any impact on
statewide education property taxes.
                           * * * Effective Dates * * *
Sec. 64. EFFECTIVE DATES
   This act shall take effect on passage except:
      (1) Notwithstanding 1 V.S.A. § 214, Sec. 1 (credit for taxes paid in
another state by an S corporation) shall take effect retroactively on January 1,
2025, and shall apply to taxable years beginning on and after January 1, 2025.
      (2) Secs. 3 and 4 (current use; land use change tax) shall take effect on
October 1, 2026.
      (3) Sec. 6 (communications property) shall take effect on January 1,
2027, and apply to grand lists lodged beginning on April 1, 2027.
      (4) Sec. 20 (grand list definition of parcel) shall take effect on April 1,
2028, and shall apply to grand lists lodged on and after that date.
      (5) Sec. 22 (Department of Fish and Wildlife rule on fees) shall take
effect on July 1, 2027.
      (6) Secs. 24–48 (grand list assessment date) shall take effect on July 1,
2031, and shall apply to grand lists lodged after that date.
      (7) Sec. 58 (Vermont research and development tax credit) shall take
effect on January 1, 2027, and shall apply to taxable years beginning on and
after January 1, 2027.
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      (8) Notwithstanding 1 V.S.A. § 214, Secs. 55, 56, and 57 (decoupling
from select provisions of IRC) and Secs. 60 and 61 (annual link-up) shall take
effect retroactively on January 1, 2026, and shall apply to taxable years
beginning on and after January 1, 2025.
      (9) Notwithstanding 1 V.S.A. § 214, Sec. 55a (decoupling from IRC
section 1202(a)) shall take effect retroactively on January 1, 2026, and shall
apply to taxable years beginning on and after January 1, 2026.
      (10) Secs. 62 and 63 (deposit of meals and rooms tax and purchase and
use tax revenues) shall take effect on July 1, 2026, and apply beginning with
fiscal year 2027.
      (11) Secs. 63c and 63d (deposit of meals and rooms tax and purchase
and use tax revenues) shall take effect on July 1, 2027, and apply beginning
with fiscal year 2028.
Date Governor signed bill: June 18, 2026
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