Bill H.43 proposes to exempt military retirement and survivor benefit income from Vermont income tax. The bill amends current law by adding a new provision that specifically excludes U.S. military retirement income and survivor benefit income received by the surviving spouse or dependent of a deceased service member from taxable income. This change is reflected in the definitions section of the tax code, where the new language is inserted to clarify the types of income that are exempt.

Additionally, the bill repeals the previous provision that treated U.S. military retirement income differently under the retirement income section of the tax code. It also modifies the requirements for taxpayers eligible for multiple exclusions, allowing them to choose one or both exclusions under certain conditions. The effective date of the bill is set to take effect upon passage, with retroactive application to January 1, 2026, for taxable years starting on or after that date.

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