The bill H.74 seeks to implement a full income tax exemption for Social Security benefits in Vermont over an eight-year period, significantly increasing the income thresholds for exemptions. Currently, there is a partial exemption, but the proposed legislation will raise the income limit for single filers from $50,000 to $65,000 in the first year, and for married couples filing jointly from $65,000 to $80,000. This trend of increasing income thresholds will continue throughout the phase-in period, ultimately allowing single filers to qualify for a full exemption at $107,000 and married couples at $122,000 by the final year.

In addition to these changes, the bill amends Section 32 V.S.A. 5830e of the current tax code, raising the income thresholds for full exclusion of Social Security benefits for single taxpayers from $117,000 to $127,000, with a phase-out range adjusted to between $127,000 and $137,000. For married couples, the thresholds increase from $132,000 to $142,000, with a phase-out range extending to $152,000. The bill also repeals certain provisions related to the exclusion of Social Security income, streamlining the process for taxpayers. The changes are designed to reduce the tax burden on Vermonters relying on Social Security benefits, with effective dates staggered from January 1, 2025, through 2032.

Statutes affected:
As Introduced: 32-5830e, 32-5811, 32-5813