An act relating to the exemption of Social Security benefits from Vermont income tax

2025-2026 Regular Session Introduced by Michael Boutin and 8 co-sponsors

Exempts Social Security benefits from Vermont personal income tax, reducing taxable income for recipients.

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

Summary of H.900 (2025-2026) — An act relating to the exemption of Social Security benefits from Vermont income tax

Purpose and intent

The bill seeks to exempt Social Security benefits from Vermont personal income tax.

The primary aim is to provide tax relief to retirees and align Vermont with several other states that do not tax Social Security income.

Key provisions and changes

Exemption mechanism: Social Security benefits would be fully exempt from Vermont individual income tax. This means benefits received by eligible Vermonters would not be included in Vermont taxable income.

Scope of benefits: Applies to the Social Security benefits received by residents that are currently subject to Vermont income tax under existing law.

Interaction with other tax provisions: The exemption would reduce the overall Vermont income tax base. Depending on current law, this could affect tax credits, Phaseouts, standard/itemized deductions, and other credits that interact with taxable income.

Effective date: The bill’s text indicates the change would become law upon enactment and would apply to taxable years as determined by the statute (exact start date for the exemption would be specified in the final enacted version or accompanying fiscal notes).

Who would be affected

Primary beneficiaries: Vermont residents who receive Social Security benefits, especially retirees on fixed incomes.

Indirect effects: Taxpayers whose other income, credits, or deductions interact with Social Security income, potentially altering tax liability calculations and any phaseouts or thresholds relevant to Vermont taxes.

Procedural and timeline aspects

Status: Read first time and referred to the Committee on Ways and Means (as of 2026-02-13). This indicates the bill is in the early stage of consideration, with fiscal and revenue impacts being a key focus for analysis.

Next steps in process: The Ways and Means Committee would typically hold hearings, possibly amend the bill, and report it back to the full chamber. If advanced, it would proceed through additional readings, floor votes, and potential reconciliation between houses before reaching the governor.

Fiscal impact: While not detailed in the summary, the exemption would reduce state tax revenues. The committee would likely examine revenue estimates, transitions, and any necessary adjustments to budget appropriations or offsetting measures.

Practical considerations

Tax planning: If enacted, Vermonters receiving Social Security may see a simpler tax filing and a lower tax liability on their Vermont return.

Budget implications: The state would need to account for reduced personal income tax collections and consider any necessary budget adjustments or reform of tax credits tied to income levels.

Policy alignment: The exemption would bring Vermont in line with states that do not tax Social Security benefits, potentially influencing retirement migration decisions.

This summary reflects the bill’s stated objective to exempt Social Security benefits from Vermont income tax and outlines the core provisions, affected groups, and procedural context based on the available information. Further details, including the exact text, fiscal note, and any amendments, would clarify implementation specifics and potential fiscal effects.