On June 25, Governor Phil Scott held a ceremony to sign S.51, An act relating to Vermont income tax exclusions and tax credits, into law. He was joined by members of the Legislature, current and former members of the military, and other supporters of the bill. In addition to exempting military retirement income up to $125,000 from state taxes, the bill also expands the Earned Income Tax Credit, Child Tax Credit, and exempts an additional $5,000 of Social Security income for seniors.
Governor Scott explained: “Over the last few years Vermonters have felt the impacts of inflation and higher costs in many areas, making it harder for those looking to retire and for families and workers to make ends meet, which includes paying their property taxes.
“So, at the start of the session, one of the areas I asked the Legislature to focus on was affordability,” Scott said. “I put forward some ideas to help ease the tax burden so Vermonters aren’t forced to make tough decisions about which bills they pay this month and which ones they don’t, their electric bill, their fuel bill, or their car payment, because they can’t do all three. Or worse yet, consider moving out of Vermont to a more affordable state. Because when I’m out talking to people, that’s what they’re concerned about: how expensive it is to live in Vermont.
“My affordability plan included tax breaks for workers, families, and seniors by expanding the eligibility for the Child Tax Credit and Earned Income Tax Credit and increasing the Social Security income exemption by another $5,000. It also included fully exempting military retirement pay.
“And although we didn’t get as much as I would have liked, we did make significant gains,” Scott continued. “S.51 fully exempts income up to $125,000 and tapers off for those receiving more. The bill also includes a refundable tax credit for retirees earning up to $30,000.
“Since I was first elected governor, I’ve asked the Legislature to eliminate the income tax from military retirement because with an aging demographic and declining workforce, it’ll help attract more working aged people and families to Vermont.
“And it makes a lot of sense because it’s difficult to compete with other states who are much more generous with tax incentives.
“This exemption isn’t just about tax breaks,” he said. “It’s not a partisan issue. It’s an important recruitment tool because many in the military retire at a relatively young age and have an entire civilian career ahead of them.
“They’re highly skilled from their military experience, which we need to fill jobs here in the state.
“To all the members of our military, past and present, thank you for your service to our country.
“We live in freedom because of you and it’s important we remember the contributions you’ve made to protect that,” Scott concluded.
