Bill S.17 proposes to exempt military retirement and survivor benefit income from Vermont income tax. The bill amends current law by adding new definitions to the taxable income section, specifically including U.S. military retirement income and survivor benefit income received by the surviving spouse or dependent of a deceased service member. Additionally, it repeals the previous exclusion of U.S. military retirement income from the retirement income section, thereby allowing it to be treated similarly to other retirement income for tax purposes.

The bill also modifies the requirements for taxpayers eligible for multiple exclusions, clarifying that they may elect one or both of the exclusions under the relevant subsections. The effective date of the bill is immediate upon passage, but the provisions regarding military retirement and survivor benefit income will be retroactively effective from January 1, 2026, applying to taxable years on and after that date.

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