May 10, 2024 Chris Rupe, Associate Fiscal Officer and Ted Barnett, Fiscal Analyst
H.546 – An act relating to administrative and policy changes to
tax laws
As reported by the Committee of Conference
Bill Summary
T his bill proposes numerous technical changes to the State’s various tax laws and would link
Vermont’s income tax code to the federal income tax and estate tax statutes, as written as of
December 31, 2023. H.546 would also extend the Sales and Use Tax exemption for advanced wood
boilers until 2027, expand the Sales and Use Tax to casual sales of all-terrain vehicles (ATVs), extend the
time period to claim the Machinery and Equipment Tax Credit until 2030, and permit all municipalities to
enact a Local Option Tax (LOT) without charter amendments that require General Assembly approval.
Fiscal Impact
Beginning in fiscal year 2025, H.546 would have a minimal impact to Education Fund revenues from the net
impact of the advanced wood boiler exemption and casual ATV sales inclusion. The bill could also impact
corporate income tax revenue to the General Fund to the extent that the Machinery and Equipment Tax
Credit is claimed against actual Vermont corporate income tax liabilities between 2026 and 2030. However,
given the scope of the credit and Vermont’s single sales method of apportionment, this extension is unlikely
to have a material fiscal impact in any given year. 1
The Joint Fiscal Office (JFO) estimates the remainder of the bill would have no significant fiscal impact to
State government, as most proposed changes are technical and/or administrative.
Summary of Key Provisions
The following table provides a high-level summary of the bill’s provisions:
Sections Description Revenue/Budget Impacted
Impact Fund(s)
1 Per Parcel Fee for Property Reappraisal – Technical No impact. n/a
correction to align law to existing practice of appropriating
funding for municipal grand list reappraisal and maintenance
costs from the General Fund.
1 Effective for tax years beginning on or after January 1, 2023, Vermont apportions a corporation’s taxable net income based on
the corporation’s share of total sales attributable to Vermont (single sales factor). Vermont corporate income tax is no longer
calculated based on a corporation’s share of its total payroll and property within Vermont. For more details, see the fiscal note for
Act 148 (2022): https://ljfo.vermont.gov/assets/Publications/As-Passed-by-the-General-Assembly/bc8de0f4f0/GENERAL-
361032-v5-S_53_Fiscal_Note_2022_Session.pdf
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2 Reduction of Grand List Value – Grants discretion for the No impact. See n/a
Division of Property Valuation and Review (PVR) to allow description.
towns to have education grand list value recalculated in
response to judicial decisions or appeals without waiting for
the town to fully exhaust its judicial appeals.
3-4 Annual Link-up to Federal Income Tax Laws – Links No impact. n/a
Vermont’s income tax code to the federal income tax and
estate tax laws, as written as of December 31, 2023.
5 Expansion of Renter Credit See description. General Fund
6-7 Repeal of Property Tax Credit Late Fee – Removes the $15 Approximate Municipalities
reduction of property tax credit on claims filed after April 15 cost of $88,000
and the related reimbursement to municipalities for the statewide.
administrative cost of issuing adjusted property tax bills.
8 Utility Property Valuation – Clarifies that the Director of No significant n/a
PVR may require towns to use the valuations developed by impact.
PVR for public utility properties and would require towns to
use the valuations developed by PVR for property used for
the transmission and distribution of electricity. This would
not change the requirement that properties be assessed on a
fair market value basis. Would apply to grand lists filed on
or after April 1, 2025.
9 County Property Tax Exemption – Provides county-owned De minimis. n/a
property a property tax exemption similar to the exemption
available for municipal property. Expressly retains a county’s
ability to use the public, pious, and charitable exemption for
property that qualifies. Since many counties were already
utilizing those exemptions for their properties, this change is
not expected to have a revenue impact.
10 Fuel Tax Sunset Extension to June 30, 2029 See description. Home
Weatherization
Assistance Fund
11-12 Extends Sunset for Health IT Fund and Health Care Claims See description. Health IT Fund
Tax to June 30, 2026
12a-12b Extension of Sales Tax Exemption for Advanced Wood Cost of $50,000 Education Fund
Boilers to $100,000
13-14a Sales and Use Tax Expanded to Casual Sales of ATVs (eff. $200,000 (full Education Fund
January 1, 2025) year)
15 Fee Waiver for Certified Copies of Vital Event Certificates De minimis. See n/a
description
16-17 Machinery and Equipment Tax Credit Extension See description. General Fund
20 Local Option Tax (S.60) See description. n/a
Additional Descriptions of Specific Provisions
Section 2: Reduction of Grand List Value and Recalculation of Education Tax Liability
When a town loses grand list value due to an appeal or court action, the town is responsible for reimbursing
the taxpayer and the Education Fund for any overpayments based on the old value. In these situations, towns
may submit a request to the Division of Property Valuation and Review (PVR) to recalculate their education
property tax liability, but current law requires towns to first exhaust their appeals before seeking that
recalculation. This language would allow the Director of PVR to use some discretion in order to avoid
requiring towns to appeal cases all the way through the court system when it may not otherwise make sense
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to do so (e.g., the time and expense of pursuing further appeals may not be justified by the specifics of the
situation) if the court decision/appeal is consistent with fair market value. No fiscal impact is expected from
this section.
Section 5: Expansion of Renter Credit
Section 5 would expand the eligibility for the renter credit by increasing the income limit from 50% of Area
Median Income (AMI) to 65% of AMI.2 Doing so is expected to enhance the value of the renter credit for
the 4,000 existing recipients and make the credit accessible to up to 3,000 more applicants.
In recent years, the full $9.5 million General Fund appropriation for the renter credit (Sec. B.138 of the budget
bill) has been underutilized, with actual expenditures of $6.9 million in fiscal year 2022 and $6.3 million in
fiscal year 2023. When controlling for the impacts of pandemic-era housing subsidies, the Department of
Taxes estimates that the current eligibility rules would cost approximately $7.4 million per year. Expanding
the renter credit eligibility as proposed is expected to more fully utilize the $9.5 million appropriation without
increasing the cost beyond that level. This provision would apply to tax years 2025 and after.
Sections 6 – 7: Eliminate $15 Late Penalty for Property Tax Credit Applications
Under current law, a $15 reduction is applied to any property tax credit claims filed after April 15. This penalty
is paid to the respective town to compensate it “for the cost of issuing an adjusted homestead property tax
bill.” However, due to administrative improvements, most late-filed property tax credit claims are included
with the timely-filed claims in the first data file that towns receive from the State. This occurs prior to any
town issuing a property tax bill, so most towns do not have to reissue bills to reflect late claims.
Repealing the $15 penalty is unlikely to modify behavior. Most applicants claim the property tax credit on time
through their homestead declaration (due April 15). Applicants can also avoid the $15 fee by filing the credit
claim with a placeholder income on or before April 15, then amending the claim afterward with a more
accurate income number.
Repealing this $15 late penalty will have no State-level fiscal impact. Beginning with claims for 2024, towns
may see a very small loss of revenue. In tax year 2022, the $15 penalty generated approximately $88,000
statewide. The average impact per town is approximately $348 and the median impact is $225. This provision
would apply to tax years 2024 and after.
Section 10: Fuel Tax Extension
Section 10 would extend the sunset on the Fuel Tax by five years, from June 30, 2024, to June 30, 2029. The
Fuel Tax funds the Home Weatherization Assistance Fund pursuant to 33 V.S.A. § 2503 and has traditionally
been extended in multi-year increments. The Fuel Tax is a gross receipts tax on the retail sale of heating oil,
propane, kerosene, and dyed diesel fuel ($0.02/gallon); natural gas and coal (0.75%); and electricity (0.5%).
Section 10 proposes no changes to these rates, which generated $11.5 million in fiscal year 2023.
Sections 11 – 12: Extends Sunset for Health IT Fund and Health Care Claims Tax3
Section 11 would extend the sunset for the Health IT Fund (HIT Fund) by one year, from July 1, 2025, to
July 1, 2026. Section 12 would similarly extend the 0.199% Health Care Claims Tax, which is the revenue
source for the HIT Fund, to July 1, 2026. Per 32 V.S.A. § 10301, the HIT Fund supports information
technology adoption and utilization across Vermont’s health care system. These sections propose no change
to the Health Care Claims Tax rate, which is expected to generate $4.66 million for the HIT Fund in fiscal
year 2024.
2 Area Median Income varies by household size and county. For 2022 Vermont data on 50% of AMI:
https://erap.vsha.org/income-limits/
3 Health Care Claims Tax Summary (JFO):
https://legislature.vermont.gov/Documents/2024/WorkGroups/House%20Ways%20and%20Means/FY2025%20Budget/W~
Nolan%20Langweil~Health%20Care%20Claims%20Tax%20Summary~3-12-2024.pdf
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Section 12a – 12b: Extension of Sales Tax Exemption for Advanced Wood Boilers
These sections would extend the repeal of the Sales and Use Tax Exemption for advanced wood boilers by
three years, from July 1, 2024 to July 1, 2027. The exemption in 32 V.S.A. § 9741(52) was first enacted in Act
194 (2018) with a sunset of July 1, 2021. The exemption was later extended until July 1, 2023 in Act 83 (2019),
and until July 1, 2024 in Acts 72 and 73 (2023). The statutory purpose of the exemption, as noted in 32 V.S.A.
9706(ll), is “to promote the forest products industry in Vermont by encouraging the purchase of modern
wood heating systems.”
“Advanced wood boilers” are defined in 32 V.S.A. § 9701(55) as a boiler or furnace:
• installed as a primary central heating system;
• rated as high efficiency (a higher heating value or gross calorific value of 85% or more);
• containing at least one week of fuel storage, automated startup and shutdown, and fuel feed; and
• meeting other efficiency and air emissions standards established by the Department of Environmental
Conservation.
JFO estimates, pending more precise data, that this exemption has a forgone annual revenue impact of $50,000
– $100,000, which is de minimis in the context of the $606.9 million total forecasted Sales and Use Tax revenue
in fiscal year 2025.
Sections 13 – 14: Sales Tax Extended to Casual Sales of ATVs
Section 13 would apply the 6% Sales and Use Tax to casual sales of ATVs.4 Under current law, Sales and Use
Tax is applied to retail sales (such as those made through a dealer) and “casual sales” are exempt. 32 V.S.A.
§ 9701(12)(A) defines a “casual sale” as “an isolated or occasional sale of an item of tangible personal property
by a person who is not regularly engaged in the business of making sales of that general type of property at
retail where the property was obtained by the person making the sale, through purchase or otherwise, for the
person’s own use.”
Current law specifically excludes aircraft, snowmobiles, motorboats, and vessels that are 16 feet or more in
length from the definition of “casual sales.” Section 13 would add ATVs to the list of items excluded from
the definition of “casual sales,” thereby applying the Sales and Use Tax to all ATV sales.
Section 14 would extend the “trade-in allowance” that currently applies to snowmobiles, motorboats, and
vessels to ATVs. Under this provision, if a person sells these items and within three months purchases another
such vehicle, the taxable sales price excludes the lesser of the sale price of the first vehicle or vessel, or the
average book value at the time of sale of the first vehicle or vessel. The allowance similarly applies to certain
situations involving insurance payments for total destruction of a vehicle or vessel and another vehicle or
vessel purchased within three months of the destruction.
JFO expects these sections to increase revenue to the Education Fund by approximately $200,000 annually.
In municipalities with a one percent LOT, this change would generate minimal positive revenues for the
Payment in Lieu of Taxes (PILOT) and the Tax-Local Option Process Fees special funds. This provision
would take effect on January 1, 2025; therefore, it would generate approximately $80,000 of sales tax revenue
in fiscal year 2025 for a partial year.
Since proof of tax payment is required at registration, this change in tax policy could potentially impact
compliance with ATV registrations or trail access decal purchases in the future. Per 23 V.S.A. § 3513, 90% of
ATV fees and penalties are allocated to the Department of Forests, Parks and Recreation for use by the
4 Per 23 V.S.A. § 3501(1), an “all-terrain vehicle” is “any nonhighway recreational vehicle, except snowmobiles, having not less
than two low pressure tires (10 psi or less); not wider than 64 inches, with two-wheel ATVs having permanent, full-time power to
both wheels; and having a dry weight of less than 2,500 lbs., when used for cross-country travel on trails or on any one of the
following or a combination thereof: land, water, snow, ice, marsh, swampland, and natural terrain.”
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Vermont ATV Sportsman’s Association (VASA) for trail-related uses (the remaining 10% is allocated to the
Transportation Fund). Section 14a would require the Commissioner of Motor Vehicles to report on any
changes to the numbers of ATV registrations in calendar year 2025, any changes to revenue from ATV
registrations, any changes to funding to support the VASA trail system, and whether the Commissioner has
suggestions for restoring revenue from ATV registrations. The report is required to be submitted to the House
Committee on Ways and Means, House Committee on Transportation, Senate Committee on Finance, and
Senate Committee on Transportation by December 15, 2025.
Section 15: Fee Waiver for Certified Copies of Vital Event Certificates
Section 15 would direct the State Registrar to waive the $10 fee for certified copies of “vital event certificates”
for:5
• Individuals who attest to a lack of fixed, regular, and adequate nighttime residence; and
• Individuals between 18 and 24 years of age who resided in a foster home or residential child care
facility between 16 and 18 years of age, pursuant to placement by a child-placing agency.
In fiscal year 2023, total revenues from vital records generated $133,640 for the Health Department Special
Fund. According to the Vermont Housing Finance Agency, there were approximately 3,300 individuals
experiencing homelessness, including 2,641 adults, in calendar year 2023.6 It is not currently known precisely
how many young adults between 18 and 24 years of age resided in a foster home or residential child care
facility between 16 and 18 years of age, or how many individuals in either cohort would need to obtain new
vital event certificates in any given year. However, given the approximate sizes of these populations and the
likelihood that only a subset would require certified copies of vital event certificates in any given year, the
annual revenue loss from this provision is expected to be de minimis.
Sections 16 – 17: Machinery and Equipment Tax Credit Extension
Section 16 would extend the period of time that the Machinery and Equipment Tax Credit can be claimed or
carried forward from tax years ending on or before December 31, 2026 to tax years ending on or before
December 31, 2030.
Per 32 V.S.A. § 5813(t), the statutory purpose of the Machinery and Equipment Tax Credit (32 V.S.A. § 5930ll)
is “to provide an incentive to make a major, long-term capital investment