In a big win for Vermont taxpayers, Senate Bill 51 gained final approval on Monday, bringing a long-awaited $14 million tax cut and pension reform.
The relief package comes with a slew of new tax credits: child tax credit eligibility and the earned income tax credit will increase, while the income threshold for social security and CSRS exemption will shoot up from $50,000 to $55,000 for single filers and $65,000 to $70,000 for married filing jointly. These improvements to the tax code pave the way for a more competitive economic landscape and benefit working-class Vermonters.
Beyond tax cuts, the bill marks the culmination of a 10-year push from Governor Phil Scott to exempt military pensions from state income tax. Jason Malucci, Scott’s Director of Policy, said Vermont retirees “want to continue to contribute to the workforce, but they choose other places to live because every other state provides that income tax exemption.” Once the bill takes effect, half of Vermont military retirees will qualify for a full tax exemption. Vermont finally joins the majority of states that don’t tax military pensions, a long-overdue move that honors service while strengthening the local workforce.
The bill passed with strong bipartisan support, showing that tax relief transcends party lines when working-class taxpayers stand to benefit. Lawmakers from both sides of the aisle agreed that the package represents not just fiscal reform, but an investment in the state’s future. The combined tax credits and exemptions are expected to directly benefit over 200,000 residents.
This year’s tax cut is a potent first step that can catalyze long-term reform. With property taxes still high and inflation straining household budgets, Vermont lawmakers should continue working toward a more streamlined, pro-growth tax code that keeps families and businesses rooted in the Green Mountain State.
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Author: Landon Epperson
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