Vermont H 177: An act relating to approval of an amendment to the charter of the City of Montpelier

Bill Text

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VT LEG #380222 v.5
H.177 1
Introduced by Representatives Cordes of Bristol and Kleppner of Burlington 2
Referred to Committee on 3
Date: 4
Subject: Education; State funding of public education; taxation and finance; 5
education property tax; education income tax; education finance 6
Statement of purpose of bill as introduced: This bill proposes to transition 7
from an education property tax to an education income tax in fiscal year 2027. 8
This bill would create an education tax that is based on the income of all 9
Vermont residents (both homeowners and renters) with a rate determined by 10
locally voted budgets. This bill would eliminate the homestead education 11
property tax and levy the nonhomestead education property tax on all property 12
except residential dwellings and the two-acre parcel surrounding the dwellings. 13
This bill would continue to provide the existing renter credit. This bill also 14
proposes to update the property tax credit income sensitivity measures to 15
provide relief to a broader class of Vermont taxpayers in fiscal year 2026. 16
An act relating to income-based education funding 17
It is hereby enacted by the General Assembly of the State of Vermont: 18
* * * Education Income Tax * * * 19
Sec. 1. 32 V.S.A. chapter 151, subchapter 14 is added to read: 20

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Subchapter 14. Education Income Tax 1
§ 5961. NAME OF TAX 2
The tax imposed by this subchapter shall be known as the Vermont 3
education income tax. 4
§ 5962. EDUCATION INCOME TAX ON INDIVIDUALS 5
(a) In addition to the personal income tax assessed under section 5822 of 6
this title, there shall be an education income tax imposed each taxable year 7
upon the adjusted gross income earned or received in that year by every 8
individual subject to income taxation under the laws of the United States, in an 9
amount determined by the following tables and adjusted as required under this 10
section and section 5963 of this subchapter. 11
(1) Married individuals filing joint returns and surviving spouses: 12
If adjusted gross income is: The tax is: 13
Not over $64,600.00 3.35% of adjusted 14
gross income 15
Over $64,600.00 but $2,164.00 plus 6.60% of 16
not over $156,150.00 the amount of adjusted 17
gross income over $64,600.00 18
Over $156,150.00 but $8,206.00 plus 7.60% 19
not over $237,950.00 of the amount of adjusted 20
gross income over $156,150.00 21

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Over $237,950.00 $14,423.00 plus 8.75% 1
of the amount of adjusted 2
gross income over $237,950.00 3
(2) Heads of household: 4
If adjusted gross income is: The tax is: 5
Not over $51,850.00 3.35% of adjusted 6
gross income 7
Over $51,850.00 but $1,737.00 plus 6.60% of 8
not over $133,850.00 the amount of adjusted 9
gross income over $51,850.00 10
Over $133,850.00 but $7,149.00 plus 7.60% 11
not over $216,700.00 of the amount of adjusted 12
gross income over $133,850.00 13
Over $216,700.00 $13,446.00 plus 8.75% 14
of the amount of adjusted 15
gross income over $216,700.00 16
(3) Unmarried individuals, other than surviving spouses or heads of 17
household: 18
If adjusted gross income is: The tax is: 19
Not over $38,700.00 3.35% of adjusted 20
gross income 21

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Over $38,700.00 but $1,296.00 plus 6.60% of 1
not over $93,700.00 the amount of adjusted 2
gross income over $38,700.00 3
Over $93,700.00 but $4,926.00 plus 7.60% 4
not over $195,450.00 of the amount of adjusted 5
gross income over $93,700.00 6
Over $195,450.00 $12,659.00 plus 8.75% 7
of the amount of adjusted 8
gross income over $195,450.00 9
(4) Married individuals filing separate returns: 10
If adjusted gross income is: The tax is: 11
Not over $32,300.00 3.35% of adjusted 12
gross income 13
Over $32,300.00 but $1,082.00 plus 6.60% of 14
not over $78,075.00 the amount of adjusted 15
gross income over $32,300.00 16
Over $78,075.00 but $4,103.00 plus 7.60% 17
not over $118,975.00 of the amount of adjusted 18
gross income over $78,075.00 19
Over $118,975.00 $7,212.00 plus 8.75% 20
of the amount of adjusted 21

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VT LEG #380222 v.5
gross income over $118,975.00 1
(b) The amounts of adjusted gross income shown in the tables in this 2
section shall be adjusted annually for inflation by the Commissioner of Taxes 3
pursuant to subdivision 5822(b)(2) of this chapter. 4
(c)(1) The rates shown in the tables in this section shall be adjusted for 5
each school district by dividing the school district’s per pupil education 6
spending, as defined in 16 V.S.A. § 4001(6), by the prior year’s statewide 7
average per pupil education spending and multiplying the result by the rates 8
under this section. 9
(2) The final rate for each school district determined under this 10
subsection shall apply to the Vermont income, as defined in section 5963 of 11
this title, of a resident or