The Department of Taxes has published its annual legislative highlights, summarizing the legislative initiatives that the Department followed closely and which became law this session.
Select the tax type or topic to see more information and available resources pertaining to these important changes.
Adopts federal tax laws, basing the Vermont tax code on federal law.
Effective retroactive to January 1, 2023, and applicable to taxable years beginning on or after January 1, 2022.
Sec. 6(f)(1)
Any cultivator licensed by the Cannabis Control Board (CCB) who initiates cultivation of cannabis outdoors shall be regulated in the same manner as farming.
Effective June 14, 2023.
Sec. 6(f)(3)
If all other requirements of the Current Use Program are met, agricultural land and buildings used for cannabis cultivation may be enrolled as long as:
Cultivation and processing is done by a cultivator licensed by the CCB, and
Some amount of cultivation occurs outdoors.
Effective June 14, 2023.
Sec. 6(f)(4)
All outdoor cultivators will be eligible to use the agricultural sales tax exemption.
Effective June 14, 2023.
Sec. 23
Vape cartridges used for delivery of only cannabis are exempt from the Tobacco Products Tax.
See also Act 3, (H.145), Sec. 91
Effective June 14, 2023.
The Tobacco Products Tax shall not be applied to cannabis or hemp products that do not contain tobacco.
Effective July 1, 2023.
To fund efforts to improve the availability, quality, and affordability of child care in Vermont, Act 76 tasks the Department of Taxes with the implementation and administration of a new Child Care Contribution, composed of a payroll tax on wages and self-employment income tax.
Collection of the Child Care Contribution by the Department shall begin on July 1, 2024.
Regarding wage earners:
The contribution rate is set at 0.44 percent of each employee’s wages.
Employers are required to pay a minimum of 75 percent of the required contribution for each employee based on each employee’s wages.
An employer may deduct and withhold a maximum of 25 percent of the required contribution from each employee’s wages.
Employers shall be required to remit the combined contributions to the Department in the same manner as employees’ withheld income.
Regarding self-employed individuals:
The contribution rate is set at 0.11 percent of each individual’s self-employment income.
Self-employed individuals shall remit contributions to the Department as if those contributions were Vermont income tax and shall be paid at such a time and in the same manner as the self-employed individual is required to make estimated payments.
The Department of Children and Families shall create a Child Care Contribution Special Fund into which collected contributions shall be deposited.
Monies in this Fund may be used by the Department of Taxes for administration of the new Child Care Contribution.
Sec. 3-4
Clarifies that Sales Tax, not Meals Tax, is imposed on alcoholic beverages sold at retail in sealed containers for off-premises consumption in the retail sales sections of breweries, wineries, distilleries, tasting rooms, etc.
Effective June 19, 2023.
Sec. 8
The existing Sales Tax exemption for advanced wood boilers will be repealed on July 1, 2024, unless additional legislative action is taken to extend that sunset.
Effective June 30, 2023.
See also Act 73 (H.472), Sec. 23.
Sec. 102
Sec. 103
Requires the Department of Taxes to make specific updates to the Fuel Tax Form, FGR-165, on or before July 1, 2023, in consultation with the ANR.
This updated form shall provide information sufficient to allow the ANR to understand the amount of each fuel type sold or consumed.
Effective March 20, 2023.
Requires the Department to disclose specific information to the Public Utility Commission (PUC) and the DPS.
Such disclosure will occur only from January 1, 2024, until December 31, 2024.
Such entities receiving this information from the Department of Taxes shall be subject to penalties for unauthorized redisclosure of information received unless such information cannot identify or be associated with a particular taxpayer.
Effective May 11, 2023.
Sec. 1
Cider containing one to 16 percent alcohol by volume shall now be referred to as “hard cider,” to differentiate between non-alcoholic cider and hard cider containing alcohol.
Effective July 1, 2023.
Sec. 7
Taxes paid by packagers and wholesale dealers on hard ciders shall be the same as previously paid by such entities on cider.
Effective July 1, 2023.
Annually, the Department transfers a percentage of the "premium tax revenues collected" to the Department of Financial Regulation (DFR). The percentage of revenues transferred previously was 11% and is now 13%.
Revenues transferred to DFR are used for the regulation of captive insurance in Vermont.
Effective July 1, 2023.
Sec. 1
Immediately removes the Common Level of Appraisal (CLA) as a factor triggering reappraisal orders issued by the Department of Taxes’ Division of Property Valuation and Review (PVR), which historically have been issued when a municipality’s property values are significantly different than fair market value.
Effective retroactive to April 1, 2022, and applicable to grand lists lodged on or after April 1, 2022.
Sec. 2
Phases in a reappraisal cycle, requiring that every municipality reappraise at least every six years.
A municipality will be required to conduct a reappraisal of its grand list properties if it has a Coefficient of Dispersion (COD) greater than 20, or if a municipality has not begun the reappraisal process within six years of the date on which its previous reappraisal process began.
Effective January 1, 2025
As detailed below in "Studies," Act 68 requires the Department to produce two reports, a progress and final report, which focus on:
Sec. 6
Requires that certified training includes bias reduction training and education on racial disparities in property valuation outcomes. The Department shall continue to receive an allocation to provide educational opportunities at no cost, and scholarships for attendance at national programs will be available.
Effective July 1, 2023.
Sec. 7
Clarifies that individuals or firms employed or contracted by a municipality to do appraisal work or the work of an assessor must meet training requirements established by the Director of PVR.
Effective July 1, 2023.
Sec. 8
Clarifies that elected listers or board of listers need approval from the Director of PVR to perform reappraisal work themselves.
All elected listers must meet PVR training requirements within a year of commencing their duties.
Effective January 1, 2026.
Sec. 9
All changes in these sections are effective June 19, 2023.
Sec. 33
Amends the definition of “improvements” to include the funding of debt service interest payments for a period of up to two years, beginning on the date on which the first debt service in incurred.
Amends the definition of “financing” to include an allowance for bond anticipation notes to be used as a method of financing, although they shall not be considered the first incurrence of debt.
Sec. 34
Sec. 35
Sec. 36
If a municipality with a TIF has entered into an agreement that reduces the municipality’s education property tax liability, the municipality’s municipal and education tax increment shall be calculated based on the assessed value of properties and not on the stabilized value.
Eliminates the ability of Vermont Economic Progress Council (VEPC) to apply to the State Emergency Board to increase the six-district limit of allowable TIF districts while the Vermont Legislature is not in session.
Sec. 37
Sec. 38
Approves an amendment to the charter of the Town of Shelburne authorizing the adoption of a one percent LOT on sales, meals, alcoholic beverages, and rooms.
Effective June 8, 2023.
This Act approves the amendment to the charter of the City of Rutland authorizing the adoption of a one percent LOT on sales.
Effective June 8, 2023.
Amends the charter of the Town of Berlin to authorize the Town Treasurer, with Selectboard approval, to waive the personal property or inventory tax when the total assessed value of the personal property or inventory is less than or equal to $1,650.00.
Effective June 8, 2023.
For part-year Vermont residents claiming the Child and Dependent Care Credit (CDCC) and/or the Earned Income Tax Credit (EITC), creates a simple ratio to apportion the credit amount based on income earned or received while living in Vermont compared to all income.
Effective for tax year 2023: the EITC, CDCC, and Vermont Child Tax Credit (CTC) all employ this same simple apportionment ratio when claimed by part-year residents.
Clarifies that both full and part-year Vermont residents may be eligible to claim the CDCC, and allows claimants to include expenses for care services provided outside of Vermont.
Makes Vermont’s Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) available to all qualifying Vermont residents regardless of whether they, their spouse, or their otherwise qualified dependents have a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN).
Directs the Department to create a process for claiming the CTC and EITC without an ITIN or SSN, specifying that the process shall not include inquiry about citizenship or immigration status.
Adds protections for records related to individuals filing for the Vermont EITC and/or the Vermont CTC without an ITIN or SSN.
Sec. 12
Creates an exemption from Land Use Change Tax (LUCT) for land owned or acquired by a Native American tribe or a qualified tribal nonprofit.
Sec. 22
Provides for the extension of the deadline for claiming a Property Tax Credit:
The credit shall be reduced by $150 on any claim filed after October 15 but on or before March 15 of the following year.
When claims are made after October 15, the credit shall be sent directly to the claimant by the Department of Taxes, and
The municipality shall not be required to reissue an adjusted homestead property tax bill.
Property Tax Credit claims may not be filed after March 15 of the following year for which the claim is made.
Transfers of property from one qualifying nonprofit to a related qualifying nonprofit are not subject to the Property Transfer Tax as long as specific conditions exist, including:
Controlling interest percentage for at least one of the related organizations is 50 percent or more,
Purpose of transfer is not strictly to avoid taxation, based on the Department’s assessment, and
Length of time between transfers is less than three years.
By December 15, 2023, the Department shall provide a progress report containing:
A preliminary statewide reappraisal schedule phasing in full reappraisals for each municipality within six years, with the first municipalities scheduled to complete reappraisal on or before April 1, 2027.
A study of existing municipal data that could be used to identify and differentiate between properties on the municipal and statewide education grand lists.
Options for implementation of implicit bias reduction training for listers and assessors.
Considerations and recommendations for changing the annual date by which grand lists are to be lodged.
By December 15, 2024, the Department shall provide a report containing:
A detailed implementation proposal for creating a statewide system for reappraisals.
Recommendations on how to distinguish between different types and uses of property on the grand lists, and a proposal for integration of these beginning January 1, 2026.
Regarding the statewide system for reappraisals, the Department shall propose legislative language as needed.
A consideration of funding needed, including the possibility of reallocating revenues from the per-parcel fees to operate the system.
Administration of reappraisals for each municipality including but not limited to prioritization, scheduling, appeals, and adjustments to the coefficient of dispersion if necessary.
This section of the bill, which is commonly known as the Big Bill, or the Budget, creates a Public Safety Communications Task Force to oversee and manage the design and implementation of a statewide public safety communications system.
The Department of Taxes is to provide access to expertise and data maintained by the Department to the above Task Force, subject to protections otherwise afforded by law to requested information.
Effective June 20, 2023
The Vermont Department of Taxes’ Division of Property Valuation and Review serves Vermonters in many ways. Among them, PVR is responsible for administering the Use Value Appraisal Program, also known as Current Use (CU), and, more recently, has been charged with development of a State Appraisal and Litigation Assistance Program.
Sec. E.100(a)(1)(H)
This section of the bill regarding the State budget authorizes the Department to hire one Program Manager in the Division of PVR to manage the State Appraisal and Litigation Assistance Program.
Effective July 1, 2023.
Sec. E.100(a)(2)(A)
Authorizes the Department to hire one Staff Attorney to assist in the management of the State Appraisal and Litigation Assistance Program.
Effective July 1, 2023.
