H 949

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2026
No. 169. An act relating to homestead property tax yields, the
nonhomestead property tax rate, and technical changes to education
finance.
                                     (H.949)
It is hereby enacted by the General Assembly of the State of Vermont:
                                * * * Yields * * *
Sec. 1. PROPERTY DOLLAR EQUIVALENT YIELD, INCOME
          DOLLAR EQUIVALENT YIELD, AND NONHOMESTEAD
          PROPERTY TAX RATE FOR FISCAL YEAR 2027
   For fiscal year 2027 only:
      (1) Pursuant to 32 V.S.A. § 5402b(b), the property dollar equivalent
yield shall be $9,401.00.
      (2) Pursuant to 32 V.S.A. § 5402b(b), the income dollar equivalent yield
shall be $12,960.00.
      (3) Notwithstanding 32 V.S.A. § 5402(a)(1) and any other provision of
law to the contrary, the nonhomestead property tax rate shall be $1.643 per
$100.00 of equalized education property value.
                    * * * Excess Spending Exemption * * *
Sec. 2. 16 V.S.A. § 4001(6) is amended to read:
      (6) “Education spending” means the amount of the school district
budget, any assessment for a joint contract school, career technical center
payments made on behalf of the district under subsection 1561(b) of this title,
and any amount added to pay a deficit pursuant to 24 V.S.A. § 1523(b) that is
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paid for by the school district, but excluding any portion of the school budget
paid for from any other sources such as endowments, parental fundraising,
federal funds, nongovernmental grants, or other State funds such as special
education funds paid under chapter 101 of this title.
          (A) [Repealed.]
          (B) For all bonds approved by voters prior to July 1, 2024 2026,
voter-approved bond payments toward principal and interest shall not be
included in “education spending” for purposes of calculating excess spending
pursuant to 32 V.S.A. § 5401(12).
                         * * * Technical Changes * * *
Sec. 3. 32 V.S.A. § 6061 is amended to read:
§ 6061. DEFINITIONS
   As used in this chapter unless the context requires otherwise:
                                      ***
      (14) “Statewide education tax rate” means the homestead education
property tax rate multiplied by the municipality’s education spending
adjustment under subdivision 5402(a)(2) of this title and the statewide
adjustment of the taxable year as defined in subdivision 5401(17) of this title
and used to calculate taxes assessed in the municipal fiscal year that began in
the taxable year.
                                      ***
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      (17) “Equalized value of the housesite in the taxable year” means the
value of the housesite on the grand list for April 1 of the taxable year, divided
by the number resulting from dividing the municipality’s common level of
appraisal of the taxable year by the statewide adjustment of the taxable year as
defined in subdivision 5401(17) of this title.
                                      ***
Sec. 4. EDUCATION FUND REFUND; CITY OF BARRE TIF DISTRICT;
          TAX INCREMENT; FY 2021–FY 2024
   Notwithstanding 16 V.S.A. § 4025, the sum of $150,576.00 is appropriated
from the Education Fund to the Department of Taxes in fiscal year 2027 for a
payment to the City of Barre to compensate the City for overpayments of
education property taxes in fiscal years 2021–2024 due to insufficient retention
of tax increment from the City’s tax increment financing district fund.
Sec. 5. 16 V.S.A. § 2961 is amended to read:
§ 2961. CENSUS GRANT
   (a) As used in this section:
      (1) “Average daily membership” shall have has the same meaning as in
subdivision 4001(1) of this title, except it shall exclude excludes State-placed
students.
      (2) “Average daily membership of a supervisory union” means the
aggregate average daily membership of the school districts that are members of
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the supervisory union or, for a supervisory district, the average daily
membership of the supervisory district.
      (3) “Long-term membership” of a supervisory union in any school year
means the average of the supervisory union’s average daily membership over
the most recent three school years for which data are available.
      (4) “Uniform base amount” means an amount determined by:
          (A) dividing an amount:
            (i) equal to the average State appropriation for fiscal years 2018,
2019, and 2020 for special education under sections 2961 (standard
mainstream block grants), 2963 (special education expenditures
reimbursement), and 2963a (exceptional circumstances) of this title; and
            (ii) increased by:
               (I) for each of fiscal years 2021, 2022, and 2023, the annual
change in the National Income and Product Accounts (NIPA) Implicit Price
Deflator for State and Local Government Consumption Expenditures and
Gross Investment as reported by the U.S. Department of Commerce, Bureau of
Economic Analysis (inflation factor); and
               (II) for each of fiscal years 2024, 2025, and 2026, the average
inflation factor for fiscal years 2021, 2022, and 2023; by
          (B) the statewide long-term membership $2,350.00, as adjusted for
inflation. The uniform base amount shall be adjusted for inflation each fiscal
year beginning in fiscal year 2028 by adjusting the uniform base amount for
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the preceding fiscal year by the most recent three-year average annual
percentage change in the National Income and Product Accounts (NIPA)
implicit price deflator for state and local government consumption
expenditures and gross investment published by the U.S. Department of
Commerce, Bureau of Economic Analysis, and rounding upward to the nearest
whole dollar amount.
   (b) The State commits to satisfying its special education maintenance of
fiscal support requirement under 34 C.F.R. § 300.163(a).
   (c) Each supervisory union shall receive a census grant each fiscal year to
support the provision of special education services to students on an
individualized education program. Supervisory unions shall use this funding
and other available sources of funding to provide special education services to
students in accordance with their individualized education programs as
mandated under federal law. A supervisory union may use census grant funds
to support the delivery of the supervisory union’s comprehensive system of
educational services under sections 2901 and 2902 of this title, but shall not
use census grant funds in a manner that abrogates its responsibility to provide
special education services to students in accordance with their individualized
education programs as mandated under federal law.
   (d)(1)(A) For fiscal year 2023, the amount of the census grant for a
supervisory union shall be:
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            (i) the average amount it received for fiscal years 2018, 2019, and
2020 or the average amount it received for fiscal years 2019, 2020, and 2021,
whichever amount is greater, from the State for special education under
sections 2961 (standard mainstream block grants), 2963 (special education
expenditures reimbursement), and 2963a (exceptional circumstances) of this
title; increased by
            (ii) the annual change in the National Income and Product
Accounts (NIPA) Implicit Price Deflator for State and Local Government
Consumption Expenditures and Gross Investment as reported by the U.S.
Department of Commerce, Bureau of Economic Analysis.
          (B) The amount determined under subdivision (A) of this subdivision
(1) shall be divided by the supervisory union’s long-term membership, to
determine the base amount of the census grant, which is the amount of the
census grant calculated on a per student basis.
      (2) For fiscal year 2027 and subsequent fiscal years, the The amount of
the census grant for a supervisory union shall be the uniform base amount
multiplied by the supervisory union’s long-term membership.
      (3) For fiscal years 2024, 2025, and 2026, the amount of the census
grant for a supervisory union shall be determined by multiplying the
supervisory union’s long-term membership by a base amount established under
this subdivision. The base amounts for each supervisory union for fiscal years
2024, 2025, and 2026 shall move gradually the supervisory union’s fiscal year
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2023 base amount to the fiscal year 2027 uniform base amount by prorating the
change between the supervisory union’s fiscal year 2023 base amount and the
fiscal year 2027 uniform base amount over this three-fiscal-year period.
* * * Excess Spending Penalty Transition Fiscal Years 2028–2032 * * *
Sec. 6. 32 V.S.A. § 5401 is amended to read:
§ 5401. DEFINITIONS
   As used in this chapter:
                                       ***
      (12) “Excess spending” means:
           (A) The the per pupil spending amount of the district’s education
spending, as defined in 16 V.S.A. § 4001(6), plus any amount required to be
added from a capital construction reserve fund under 24 V.S.A. § 2804(b), that
exceeds the excess spending threshold, as determined by the Secretary of
Education on or before November 15 of each year based on the passed budgets
to date.
           (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, as of November 15, for state and local government purchases of
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goods and services, from fiscal year 2025 through the fiscal year for which the
amount is being determined.
                                       ***
        (18) “Excess spending base” means the statewide average district per
pupil education spending for fiscal year 2025, as adjusted for inflation. The
excess spending base shall be adjusted for inflation by adjusting the excess
spending base by the change in the National Income and Product Accounts
(NIPA) implicit price deflator for state and local government consumption
expenditures published by the U.S. Department of Commerce, Bureau of
Economic Analysis, as of November 15, from fiscal year 2025 through the
fiscal year for which the amount is being determined, and rounding upward to
the nearest whole dollar amount.
        (19) “Excess spending threshold” means 112.5 percent of the excess
spending base.
Sec. 7. EXCESS SPENDING PENALTY; TRANSITION
   Notwithstanding 32 V.S.A. § 5401(19), beginning in fiscal year 2028, the
excess spending threshold shall annually decrease according to the following
schedule until reaching the statutory excess spending threshold in fiscal year
2032:
        (1) in fiscal year 2028, 115.5 percent of the excess spending base;
        (2) in fiscal year 2029, 114.5 percent of the excess spending base;
        (3) in fiscal year 2030, 113.5 percent of the excess spending base;
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         (4) in fiscal year 2031, 113 percent of the excess spending base; and
         (5) in fiscal year 2032, 112.5 percent of the excess spending base.
               * * * Renter Credit Expansion Claim Year 2027 * * *
Sec. 8. 32 V.S.A. § 6066(b) is amended to read:
   (b)(1) An eligible claimant who rented the homestead shall be entitled to a
credit for the taxable year in an amount not to exceed $2,500.00 $3,250.00, to
be calculated as follows:
            (A) If the claimant’s income is less than or equal to the extremely
low-income limit, the claimant shall be entitled to a credit in the amount of 10
12.5 percent of fair market rent.
            (B) If the claimant’s income is greater than the extremely low-
income limit but less than or equal to the very low-income limit, the claimant
shall be entitled to a percentage of the credit that is proportional to the
claimant’s income that is less than the very low-income limit, determined by:
               (i) subtracting the claimant’s income from the very low-income
limit;
               (ii) dividing the value under subdivision (i) of this subdivision
(1)(B) by the difference between the extremely low-income limit and the very
low-income limit; and
               (iii) multiplying the value under subdivision (ii) of this
subdivision (1)(B) by 10 12.5 percent of fair market rent.
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          (C) If the claimant’s income is greater than the very low-income
limit, the claimant shall not be entitled to a renter credit.
          (D) A claimant who is eligible for a renter credit, including pursuant
to this subsection (b), and who receives a rental subsidy shall be entitled to a
credit in the amount of 10 12.5 percent of gross rent paid.
          (E) A renter credit shall be prorated by the number of calendar
months in the taxable year during which the claimant rented the homestead,
except for a credit based on gross rent paid under subdivision (D) of this
subdivision (b)(1), and by the portion of the principal dwelling used for
business purposes, if the portion used for business purposes includes more than
25 percent of the floor space of the dwelling.
      (2) The Commissioner shall calculate the credit under subdivision (1) of
this subsection (b) using the fair market rent corresponding to a number of
bedrooms equal to the number of personal exemptions allowed under
subdivision 5811(21)(C) of this title for the taxable year, provided that for
claimants who resided with any person who was neither the claimant’s
dependent nor jointly filing spouse at any time during the taxable year, the
Commissioner shall reduce the credit by 50 percent.
Sec. 9. 32 V.S.A. § 6067 is amended to read:
§ 6067. CREDIT LIMITATIONS
   Only one individual per household per taxable year shall be entitled to a
property tax credit under this chapter. An individual who received a
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homestead exemption or credit with respect to property taxes assessed by
another state for the taxable year shall not be entitled to receive a credit under
this chapter. No taxpayer shall receive a renter credit under subsection 6066(b)
of this title in excess of $2,500.00 $3,250.00. No taxpayer shall receive a
property tax credit under subdivision 6066(a)(3) of this title greater than
$2,400.00 or cumulative credit under subdivisions 6066(a)(1)-(2) 6066(a)(1),
(2), and (4) of this title greater than $5,600.00.
            * * * Circuit Breaker Expansion Fiscal Year 2028 * * *
Sec. 10. 32 V.S.A. § 6066 is amended to read:
§ 6066. COMPUTATION OF PROPERTY TAX CREDIT AND RENTER
          CREDIT
   (a) An eligible claimant who owned the homestead on April 1 of the year in
which the claim is filed shall be entitled to a credit for the prior year’s
homestead property tax liability amount determined as follows:
      (1)(A) For a claimant with household income of $90,000.00 or more:
                                        ***
          (B) For a claimant with household income of less than $90,000.00
but more than $47,000.00 $50,000.00, the statewide education tax rate,
multiplied by the equalized value of the housesite in the taxable year, minus (if
less) the sum of:
                                        ***
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          (C) For a claimant whose household income does not exceed
$47,000.00 $50,000.00, the statewide education tax rate, multiplied by the
equalized value of the housesite in the taxable year, minus the lesser of:
                                      ***
      (3) A claimant whose household income does not exceed $47,000.00
$50,000.00 shall also be entitled to an additional credit amount from the
claimant’s municipal taxes for the upcoming fiscal year that is equal to the
amount by which the municipal property taxes for the municipal fiscal year
that began in the taxable year upon the claimant’s housesite exceeds a
percentage of the claimant’s household income for the taxable year as follows:
If household income (rounded to  then the taxpayer is entitled to
      the nearest dollar) is:  credit for the reduced property tax in
                                       excess of this percent of that income:
          $0.00 – 9,999.00  1.50
$10,000.00 – 47,000.00 50,000.00  3.00
      (4) A claimant whose household income does not exceed $47,000.00
$50,000.00 shall also be entitled to an additional credit amount from the
claimant’s statewide education tax for the upcoming fiscal year that is equal to
the amount by which the education property tax for the municipal fiscal year
that began in the taxable year upon the claimant’s housesite, reduced by the
credit amount determined under subdivisions (1) and (2) of this subsection,
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exceeds a percentage of the claimant’s household income for the taxable year
as follows:
If household income (rounded to  then the taxpayer is entitled to
         the nearest dollar) is:        credit for the reduced property tax in
                                        excess of this percent of that income:
           $0.00 – 9,999.00  0.5
     $10,000.00 – 24,999.00  1.5
$25,000.00 – 47,000.00 50,000.00  2.0
                                       ***
   (b)(1) An eligible claimant who rented the homestead shall be entitled to a
credit for the taxable year in an amount not to exceed $3,250.00 $2,500.00, to
be calculated as follows:
           (A) If the claimant’s income is less than or equal to the extremely
low-income limit, the claimant shall be entitled to a credit in the amount of
12.5 10 percent of fair market rent.
           (B) If the claimant’s income is greater than the extremely low-
income limit but less than or equal to the very low-income limit, the claimant
shall be entitled to a percentage of the credit that is proportional to the
claimant’s income that is less than the very low-income limit, determined by:
               (i) subtracting the claimant’s income from the very low-income
limit;
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             (ii) dividing the value under subdivision (i) of this subdivision
(1)(B) by the difference between the extremely low-income limit and the very
low-income limit; and
             (iii) multiplying the value under subdivision (ii) of this
subdivision (1)(B) by 12.5 10 percent of fair market rent.
          (C) If the claimant’s income is greater than the very low-income
limit, the claimant shall not be entitled to a renter credit.
          (D) A claimant who is eligible for a renter credit, including pursuant
to this subsection (b), and who receives a rental subsidy shall be entitled to a
credit in the amount of 12.5 10 percent of gross rent paid.
          (E) A renter credit shall be prorated by the number of calendar
months in the taxable year during which the claimant rented the homestead,
except for a credit based on gross rent paid under subdivision (D) of this
subdivision (b)(1), and by the portion of the principal dwelling used for
business purposes, if the portion used for business purposes includes more than
25 percent of the floor space of the dwelling.
      (2) The Commissioner shall calculate the credit under subdivision (1) of
this subsection (b) using the fair market rent corresponding to a number of
bedrooms equal to the number of personal exemptions allowed under
subdivision 5811(21)(C) of this title for the taxable year, provided that for
claimants who resided with any person who was neither the claimant’s
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dependent nor jointly filing spouse at any time during the taxable year, the
Commissioner shall reduce the credit by 50 percent.
                                       ***
Sec. 11. 32 V.S.A. § 6067 is amended to read:
§ 6067. CREDIT LIMITATIONS
   Only one individual per household per taxable year shall be entitled to a
property tax credit under this chapter. An individual who received a
homestead exemption or credit with respect to property taxes assessed by
another state for the taxable year shall not be entitled to receive a credit under
this chapter. No taxpayer shall receive a renter credit under subsection 6066(b)
of this title in excess of $3,250.00 $2,500.00. No taxpayer shall receive a
property tax credit under subdivision 6066(a)(3) of this title greater than
$2,400.00 $2,600.00 or cumulative credit under subdivisions 6066(a)(1), (2),
and (4) of this title greater than $5,600.00 $6,000.00.
  * * * Conforming Changes for Foundation Formula Fiscal Year 2030 * * *
Sec. 12. 32 V.S.A. § 5401 is amended to read:
§ 5401. DEFINITIONS
   As used in this chapter:
                                       ***
      (18) “Excess spending base” means the statewide average district per
pupil education spending for fiscal year 2025, as adjusted for inflation. The
excess spending base shall be adjusted for inflation by adjusting the excess
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spending base by the change in the National Income and Product Accounts
(NIPA) implicit price deflator for state and local government consumption
expenditures published by the U.S. Department of Commerce, Bureau of
Economic Analysis, as of November 15, from fiscal year 2025 through the
fiscal year for which the amount is being determined, and rounding upward to
the nearest whole dollar amount. [Repealed.]
      (19) “Excess spending threshold” means 112.5 percent of the excess
spending base. [Repealed.]
Sec. 13. 32 V.S.A. § 6066 is amended to read:
§ 6066. COMPUTATION OF HOMESTEAD PROPERTY TAX
          EXEMPTION, MUNICIPAL PROPERTY TAX CREDIT, AND
          RENTER CREDIT
   (a)(1) An eligible claimant who owned the homestead on April 1 of the
claim year and whose household income does not exceed $115,000.00 shall be
entitled to a homestead property tax exemption in the claim year in an amount
determined as follows:
                                      ***
      (2) An eligible claimant who owned the homestead on April 1 of the
claim year and whose household income does not exceed $47,000.00
$50,000.00 shall also be entitled to a credit amount against the claimant’s
municipal taxes for the upcoming fiscal year that is equal to the amount by
which the municipal property taxes for the municipal fiscal year that began in
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the taxable year upon the claimant’s housesite exceeds a percentage of the
claimant’s household income for the taxable year as follows:
If household income (rounded to  then the taxpayer is entitled to
      the nearest dollar) is:  credit for the reduced property tax in
                                       excess of this percent of that income:
          $0.00 – 9,999.00  1.50
$25,000.00 – 47,000.00 50,000.00  3.00
                                      ***
Sec. 14. 32 V.S.A. § 6067(c) is amended to read:
   (c) Dollar amount. No claimant shall receive a renter credit under
subsection 6066(b) of this title in excess of $2,500.00. No claimant shall
receive a municipal property tax credit under subdivision 6066(a)(2) of this
title greater than $2,400.00 $2,600.00.
                                * * * Tuition * * *
Sec. 15. TUITION FOR FISCAL YEARS 2028–2032
   Notwithstanding any provision of law to the contrary, for fiscal years 2028–
2032 only, the tuition paid to a public or approved independent receiving
school shall not increase from the prior year by more than the relative
percentage change in statewide education spending between the previous fiscal
year and the fiscal year preceding that. The tuition overcharge or undercharge
provisions contained in 16 V.S.A. § 836 shall continue to apply in fiscal years
2028–2032.
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                           * * * Effective Dates * * *
Sec. 16. EFFECTIVE DATES
   (a) This section, Sec. 1 (yields), Sec. 3 (statewide adjustment correction),
Sec. 4 (Barre TIF overpayment refund), and Sec. 5 (census grant inflator) shall
take effect on July 1, 2026.
   (b) Secs. 8 and 9 (one-year renter credit expansion) shall take effect on July
1, 2026, and apply to claim year 2027.
   (c) Sec. 2 (excess spending exemption) shall take effect on July 1, 2027,
and apply to fiscal year 2028 and after.
   (d) Secs. 6 and 7 (excess spending penalty transition) shall take effect on
July 1, 2027, and apply to fiscal year 2028 and after.
   (e) Secs. 10 and 11 (circuit breaker expansion) shall take effect on July 1,
2027, and apply to fiscal year 2028 and after, except that amendments to the
renter credit shall apply to claim year 2028 and after.
   (f) Sec. 15 (tuition for fiscal years 2028–2032) shall take effect on July 1,
2027, and apply to fiscal years 2028–2032.
   (g) Sec. 12 (excess spending repeal) shall take effect on June 30, 2029.
   (h) Secs. 13 and 14 (conforming changes for foundation formula) shall take
effect on July 2, 2029.
Date Governor signed bill: June 18, 2026
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