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H 273

An act relating to the Use Value Appraisal Program

2025-2026 Regular Session Introduced by Doug Bishop and 24 co-sponsors

H.273 broadens Use Value Appraisal eligibility for farmers (including processing-based and equine earnings) and cuts Land Use Change Tax from 10% to 6% on land leaving current use.

Read first time and referred to the Committee on Agriculture, Food Resiliency, and Forestry
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Bill Summary · H 273

Summary of H.273 (2025-2026) — Vermont

Purpose and intent

H.273 proposes changes to Vermont’s Use Value Appraisal Program (commonly known as current use) with two main goals:
- Adjust eligibility criteria so that more (or differently defined) farming operations qualify for enrollment.
- Modify the land use change tax (LUCT) rate when land moves out of current-use status, reducing the tax burden upon change of use.

The bill is introduced by a broad group of House representatives and referred to the Agriculture, Food Resiliency, and Forestry Committee. It takes effect upon passage.

Key provisions and changes

1) Eligibility for the Use Value Appraisal Program
- Current rule (as amended by the bill): A “farmer” eligible for enrollment must meet income-based criteria related to farming activities.
- New standard of eligibility (Sec. 1, 32 V.S.A. § 3752(7)):
- An individual earns at least 25 percent of their annual gross income from the business of farming (instead of a higher or different threshold, as implied by the bill’s language).
- The definition of eligible farming income is tied to the Internal Revenue Code, including the definition of farming income in Regulation 1.175-3.
Alternative pathways (in cases involving value-added processing on farm):
- If a farm produces crops that are processed in a farm facility located on enrolled land or on an adjoining housesite, and the gross income from those processed products (plus other farming income) equals at least 50 percent of the farmer’s annual gross income, the individual may be eligible under criteria that consider processing and sale of farm products.
- Specific criteria also require that the farm produce at least 75 percent of the farm crops processed in the on-farm facility (a production-reliant threshold).
- There is also an explicit criterion for eligibility if the farmer earns at least 25 percent of income from the raising, feeding, or management of equines.
- Administrative role: The Agency of Agriculture, Food and Markets will assist with eligibility determinations under the processing-based criteria.

2) Land Use Change Tax (LUCT) rate
- The LUCT rate when land leaves current-use status is proposed to be reduced from 10 percent to 6 percent of the full fair market value of the changed land (Sec. 2, amended 32 V.S.A. § 3757(a)).
- Calculation details:
- If the changed land is part of a larger parcel, the fair market value used for the LUCT is determined as if the changed portion were a separate parcel, adjusted by the common level of appraisal.
- The LUCT is in addition to annual property taxes.
- The bill clarifies that the LUCT does not apply to subsequent development of the same land, nor does it automatically apply merely because previously eligible land becomes ineligible, unless development has occurred.

3) Effective date
- The act takes effect on passage (Sec. 3).

Who would be affected

  • Farmers and landowners enrolled or seeking enrollment in Vermont’s Use Value Appraisal Program.
  • Farm businesses that engage in processing on-farm facilities (including crops processed on-site and product sales) and equine operations, due to broadened eligibility considerations.
  • Property owners contemplating development after current-use enrollment, as the LUCT rate would be reduced, influencing the financial impact of changing land use.

Procedural and timeline aspects

  • Introduced and referred to the House Committee on Agriculture, Food Resiliency, and Forestry on February 19, 2025.
  • The bill includes details for committee walkthroughs and fiscal analyses, indicating a standard legislative process with potential amendments.
  • Immediate effect upon enactment means timing for current-use enrollment decisions could shift quickly for eligible applicants.

Notable details and considerations

  • The 25 percent income threshold aligns with “one-half 25 percent” phrasing in the bill, indicating 25 percent as the key threshold for farming income, with additional interpretations for income from processing and equine activities.
  • The processing-based eligibility provisions create a nuanced pathway for farm operations that add value through on-farm processing.
  • The LUCT reduction from 10% to 6% represents a meaningful tax change that could affect incentives to leave land in current use versus development.

Overall, H.273 seeks to broaden and clarify eligibility for Vermont’s Use Value Appraisal Program in certain farming and equine contexts while easing the tax impact when land transitions out of current use.

Compiled from official sources — confirm details with the bill’s official record.

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