Bill H.43 proposes to exempt military retirement and survivor benefit income from Vermont income tax. The bill amends current law by adding new definitions and provisions that specifically exclude U.S. military retirement income and survivor benefit income received by the surviving spouse or dependent of a deceased service member from taxable income calculations. This change is intended to provide financial relief to military families and veterans by ensuring that their retirement and survivor benefits are not subject to state income tax.

In addition to the new exemptions, the bill also repeals previous language that included U.S. military retirement income under certain retirement income exclusions, thereby clarifying that such income is now fully exempt. The effective date of the new provisions will be retroactive to January 1, 2026, allowing taxpayers to benefit from these changes in their income tax filings for that year and beyond.

Statutes affected:
As Introduced: 32-5811, 32-5830e