Statewide Adjustment

Application of the New Statewide Adjustment

In 2024 the Vermont Legislature passed Act 183, which updates the education funding formula starting with the 2025-2026 property tax year, beginning on July 1, 2025. It’s important to note that the law:

• does not affect how much Vermont property owners pay in property taxes;
• does not affect how much property tax Vermont towns send to the State’s Education Fund; and,
• does not affect how much money school districts receive from the Education Fund.

History and Purpose of the CLA

Act 60 of 1997 introduced an adjustment factor called the Common Level of Appraisal (CLA) that is applied to each town’s education property tax rates. A Vermont town’s CLA adjusts for any difference between the town’s assessed property value from the time of the last reappraisal and its current fair market value. Because all education property tax revenue in Vermont is shared through the State’s Education Fund, every town needs to be taxed at the same level of appraisal or else some towns would be sending more revenue than they should be and others less. The CLA aims to ensure that every town is taxed at a level of appraisal equal to 100% of fair market value.    

Homestead or Nonhomestead

All Vermont towns have two education property tax rates, a “homestead” rate that applies to the homes of the town’s residents and a “nonhomestead” rate that applies to all other properties including businesses, rentals, and second homes. The homestead rate reflects the amount that the community has voted to spend for education, while the nonhomestead rate is a uniform, statewide rate. Each of these rates is then adjusted by the town’s CLA. The CLA-adjusted rate is the final tax rate shown on a property owner’s tax bill. For more information on how education property tax rates are calculated please review the frequently asked questions on the Vermont Department of Taxes webpage: tax.vermont.gov/property/education-property-tax-rates.

Using the New Statewide Adjustment

By January 1, the Department of Taxes will have completed its “Equalization Study” that determines the CLAs for each Vermont town. But unlike prior years, beginning in 2025 these CLAs will not be applied to each town’s education property tax rates. Instead, every town’s CLA will be divided by a single “statewide adjustment” and the result will be applied to each town’s education property tax rates. The statewide adjustment can be thought of as the average level of appraisal of the entire state. For example, if a town has a CLA of 60%, but the statewide adjustment is 75%, then the adjustment factor applied to education property tax rates in that town will be 0.60 / 0.75 = 0.80 or 80%. All Vermont property will still be taxed at 100% of fair market value, but the factor applied to education property tax rates will be calculated differently.

The table below shows how the new statewide adjustment (SA) is applied and how an example town will see the same final tax rate using the new SA (75% in this example) as it would have under current law without the SA.

*School district tax rate is the school district per pupil spending divided by the homestead property yield. The yield is set annually by the Legislature.
**Final homestead tax rate under current law is the school district tax rate divided by the town’s CLA. Starting July 1, 2025, the final homestead tax rate will be the school district tax rate divided by the number resulting from dividing the town’s CLA by the SA.

Visit our Education Tax Frequently Asked Questions for more information on the CLA, yield, and property tax rates at tax.vermont.gov/property/education-property-tax-rates/faqs.