Tax Credits

Tax credits provide incentives to support business growth and activities in Vermont.

Affordable Housing
Charitable Housing Investment Credit
Downtown and Village Center
Investment Tax Credit
Machinery and Equipment
Qualified Sale of Mobile Home Park
Research and Development
Vermont Entrepreneur's Seed Capital Fund  
Wood Products Manufacturer


AFFORDABLE HOUSING

The purpose of this credit is to create or retain affordable housing for lower income Vermonters. To find out if your project is eligible, contact the Vermont Housing Finance Agency.

Credit Amount: 25% of qualified basis of the housing project.

Credit Limit: Straight-line depreciation method over recovery period of at least 27.5 years.


CHARITABLE HOUSING INVESTMENT CREDIT

This tax credit encourages investment in eligible housing charities. The eligible housing charity is determined by the Vermont Department of Housing and Community Development.

Credit Amount: Difference between interest income that would have been received at charitable threshold rate and actual interest income received.

Credit Limit: Not to exceed 3% of average outstanding principal balance of investment during taxable year. Aggregate of charitable investment allowed outstanding in any year is limited to $5 million.


DOWNTOWN AND VILLAGE CENTER

The Downtown and Village Center tax credit is designed to stimulate private investment, create jobs, restore historic buildings, and jumpstart the revitalization seen in Vermont's Designated Downtowns and Village Centers. To find out if your project is eligible contact the Vermont Department of Housing and Community Development.

Provides for three types of tax credits:

(a) Historic rehabilitation tax credit;
(b) Facade improvement tax credit; and
(c) Code or technology improvement tax credit.


INVESTMENT TAX CREDIT

The purpose of the tax credit is to encourage investment in rehabilitation, energy, qualifying advanced coal projects, qualifying gasification projects, and qualifying advanced energy project credits. Your project must be eligible for and receive the federal tax credit to receive the Vermont tax credit. For more information, contact the Vermont Department of Taxes.

Credit Amount: 24% of investment tax credit attributable to the Vermont-property portion of the investment.


MACHINERY AND EQUIPMENT

This tax credit is for businesses that contribute substantially to the economy of a Vermont Rural Economic Area Partnership (REAP) Zone. Qualifying businesses:

  • Are Located in a REAP Zone
  • Create, produce, or process tangible personal property for sale
  • Propose to make qualified capital expenditures

To find out if you qualify contact the Vermont Economic Progress Council: (802) 777-8192 and the Agency of Commerce and Community Development.


QUALIFIED SALE OF MOBILE HOME PARK

The purpose of this tax credit is to encourage sales of mobile home parks to its residents, or to a nonprofit organization that represents them, in order to provide stability to the mobile home park community. For more information about this tax credit, contact the Vermont Department of Housing and Community Development. 

Credit Amount: Credit amount is 7% of gain on sale of mobile home park that is subject to Federal income tax for the taxable year.

Credit Limitation: The credit limit cannot exceed Vermont tax liability, credit is nonrefundable. Unused credits may be carried forward for three years.


RESEARCH AND DEVELOPMENT CREDIT

If you take the federal R&D credit, you may qualify for a state R&D credit on eligible expenditures made in Vermont. The Vermont credit can be taken in an amount equal to 27% of the federal tax credit allowed in the taxable year. This credit applies to personal income tax or business or corporate income tax. Any unused credit available may be carried forward up to 10 years.

Each year, we publish a list of taxpayers who claimed this credit during the most recently completed calendar year. For more information about this tax credit, contact the Vermont Department of Taxes.


VERMONT ENTREPRENEUR'S SEED CAPITAL FUND

The purpose of this tax credit is to increase the amount of investment capital available to Vermont firms for their expansion.

Credit Amount: The first $7.15 million of capitalization contributed by taxpayers on or before January 1, 2020. There is a four-year carryforward. 

Credit Limitation:  The lesser of 4% of your contribution or 50% of your tax liability prior to receiving this credit. However, the total amount of the credit taken over four years cannot exceed 20% of the taxpayer's contribution to the initial $7.15 million capitalization of the fund.  This credit is nontransferable except from an involuntary transfer of interest in the credit. 
 

Contact Us

Commissioner Kaj Samsom
133 State Street | Montpelier, VT 05633
(802) 828-2505

Taxpayer Assistance Window
Office Hours: 7:45 a.m. - 4:30 p.m. Monday - Friday

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