An act relating to Vermont income tax exclusions and tax credits
S.51 makes several changes to Vermont’s personal income tax code by expanding or creating refundable credits and by increasing income thresholds for certain retirement-income exclusions. It raises the Vermont child tax credit to $1,000 per qualifying child age 6 or younger, and it broadens the earned income tax credit for residents and part-year residents who qualify under federal rules or would qualify but for taxpayer identification number issues. The bill also increases the income limits for excluding Social Security benefits and Civil Service Retirement System income, and it preserves the existing structure for other retirement income while clarifying how taxpayers may elect among exclusions.
The bill also creates a new refundable Vermont veteran tax credit for resident and part-year resident taxpayers who can document service in the uniformed services. The credit is $250 for taxpayers with federal adjusted gross income of $25,000 or less, phases down between $25,000 and $30,000, and is unavailable at $30,000 or above. The act is retroactive to January 1, 2025, and applies to taxable years beginning on and after that date.
The bill amends multiple provisions in Title 32 of the Vermont Statutes Annotated, including the child tax credit, earned income tax credit, retirement-income exclusions, statutory purpose language, and the addition of a new veteran tax credit section. Its practical effect is to reduce income tax liability for eligible low- and moderate-income families, workers, retirees receiving Social Security or certain pension income, and veterans, while also expanding eligibility in some cases to taxpayers who lack qualifying taxpayer identification numbers. Because the act is retroactive to the start of 2025, taxpayers may claim the revised benefits for the 2025 tax year.
The available voting history shows strong bipartisan support and little opposition. The House passed the bill 142-2, and the Committee of Conference report was adopted unanimously in the Senate 28-0. That voting pattern suggests broad agreement with the bill’s tax relief and credit expansions, especially for families, retirees, and veterans.
No committee transcript was provided, and the recorded votes indicate minimal controversy. The main policy choices embedded in the bill are the size and income phase-outs of the new or expanded credits, the higher income thresholds for retirement-income exclusions, and the rule that taxpayers eligible for multiple retirement-income exclusions generally must elect only one. Any disagreement likely centered on fiscal cost, eligibility limits, and how broadly to extend relief, but the final votes suggest those issues were not strongly divisive.