An act relating to exempting sales of building materials and supplies from sales and use tax

2025-2026 Regular Session Introduced by Ashley Bartley and 5 co-sponsors

Vermont would tax-exempt building materials and supplies for construction projects (up to $1,000,000 in three years) to cut costs and boost downtown revitalization, then sunset in

Read first time and referred to the Committee on Ways and Means

Overview

Bill H.308 (2025-2026, Vermont) proposes to exempt the sale of building materials and supplies from the Vermont sales and use tax. The exemption is designed to reduce construction costs, support revitalization of downtown districts, and provide incentives related to building activity. The measure includes a sunset timing and a transition back to a more limited exemption for manufacturing facilities.

Main purpose and intent

Reduce the cost of construction in Vermont and encourage restoration and revitalization of downtown districts.

Provide incentives to support building, renovation, and expansion activities that use building materials and supplies.

Create a temporary, broader exemption for building materials, with a planned reversion to a prior, more limited exemption structure after a set period.

Key provisions and changes

Sec. 2 (amendment to 32 V.S.A. § 9741): Adds an exemption for sales of building materials and supplies. The exemption applies to purchases used in construction, renovation, or expansion of facilities used exclusively (with limited exceptions for isolated or occasional uses) for the manufacture of tangible personal property for sale. Definitions include materials and supplies consumed or incorporated in construction or repair; blueprints are not considered supplies for the exemption.

Exemption cap: In any three consecutive years, building materials and supplies exceeding $1,000,000 in purchase value used in the described manufacturing facilities would be exempt within the scope of the provision.

Secs. 1 and 3–4: Clarify statutory purpose related to reducing construction costs and revitalizing downtown districts. They also specify the operative language and the scope of the exemption, including the same $1,000,000 threshold in Sec. 4.

Effective dates:

July 1, 2025: The building materials exemption takes effect (Secs. 1 and 2).
July 1, 2028: The reversion provisions take effect, reinstating a more limited exemption for manufacturing facilities (Secs. 3 and 4).

Who/what would be affected

Retail sales and use taxes would be waived for qualifying purchases of building materials and supplies.

Real property developers, builders, manufacturers, contractors, and construction-related businesses using building materials and supplies for qualifying projects would benefit.

Projects involving construction, renovation, or expansion of facilities used for manufacturing (with limited allowances for non-exclusive uses) would be eligible for the exemption.

Procedural and timeline considerations

Introduction and referral: H.308 is referred to the House Committee on Ways and Means (read first time February 21, 2025).

Timeline:

07/01/2025: Start of the general exemption for building materials and supplies (Sec. 2).
07/01/2028: Sunset for the broader exemption and return to a limited exemption framework for manufacturing facilities (Sec. 4).

The bill includes explicit language about how “building materials and supplies” are defined and excludes blueprints from being considered supplies for the exemption.

Notes for readers

The exemption is capped by a three-year aggregate threshold of $1,000,000 in purchase value within the exempted period, limiting tax relief for very large projects.

The intent is to support construction activity and downtown revitalization, but the exemption is temporary and transitions to a more restricted version after three years.