Taxes - Not All Bad News

The number one issue I hear when knocking doors is, understandably, taxes. My property taxes doubled when Weston reassessed everyone's property last year. It is painful and not sustainable. The legislature has been working hard on reforming our education funding system, which drives property tax rates. But this effort will take years and might not go far enough given our general proclivity for local control of everything. That said, the legislature spent over $100 million the last two years buying down property taxes. I will get into this more in a future missive.

What you probably haven't heard about is Act 71, which passed last year. It is relatively modest, but it has already had an important impact on many Vermonters! I would like to see the Social Security exemption expanded further. Here are the details according to the tax department:

As a direct result of the 2025 tax relief package (Act 71 of 2025), the Department of Taxes has reported millions of dollars returned to thousands of Vermont families, low-income residents, retirees and veterans this filing season.

• Child Tax Credit expanded eligibility: Vermont returned more than $3.6 million in new benefits to nearly 4,000 families with children under seven years old. Before last year’s bill, that credit ended when children turned six. In total, the Child Tax Credit has returned $25 million to 20,000 Vermont families for Tax Year 2025.

• Earned Income Tax Credit expansion: Act 71 increased Vermont’s match of the federal EITC rate from 38% to 100% for claimants without children. That change alone delivered an additional $2.4 million to nearly 11,000 filers. In total, Vermont’s Earned Income Tax Credit has returned $28 million to 32,000 Vermonters for Tax Year 2025.

• Social Security exemption expansion: Vermont’s Social Security exemption lowers the state income tax burden for Social Security beneficiaries who are below certain income thresholds. Act 71 increased the income threshold for full exemption of Social Security income by $5,000. That put another $1.3 million in the pockets of nearly 8,000 Vermonters.

• Military Pension and Survivor Benefit exemption expansion: For the first time, Act 71 exempted military pension and survivor benefits from income taxes for households making up to $125,000, with a partial exemption for those earning up to $175,000. So far, that has returned an additional $1.9 million to more than 2,400 military retirees or their survivors.

• Veteran Credit: Act 71 created a new refundable tax credit, up to $250, for veterans who make less than $30,000 per year. That has put roughly $439,000 back in the pockets of 1,888 low-income veterans.

The Department of Taxes estimates there are roughly 35,000 Vermonters who may qualify for refundable credits but are not receiving them. That’s because their incomes are low enough that they are not required to file a federal return. By not filing, they may be leaving hundreds or thousands of dollars in refundable credits – like the Earned Income Tax Credit, Child Tax Credit or Veteran’s Credit – on the table.

Vermonters who believe they may be eligible for these refundable credits can still file before October 15. Vermonters can visit tax.vermont.gov for information on how to file or call 802-828-2865 for assistance.

Be well,

Chris Morrow

Morrowforvt@gmail.com

www.morrow4vt.com