The bill H.74 aims to phase in a full income tax exemption for Social Security benefits in Vermont over eight years, expanding the current partial exemption. It proposes to raise the income thresholds for these exemptions, increasing the maximum income limits for single taxpayers from $50,000 to $65,000 and for married couples from $65,000 to $80,000 in the initial phase. The bill further outlines a gradual increase in income limits, with final thresholds set at $107,000 for singles and $122,000 for married couples by the end of the phase-in period.

In addition to these changes, the bill introduces a tiered exclusion system for federally taxable Social Security benefits, allowing partial exclusions for incomes between the new thresholds and higher limits of $137,000 for singles and $142,000 for married couples. It also repeals certain existing provisions related to the exclusion and clarifies the purpose of the exemption to reduce the tax burden on Vermonters receiving Social Security benefits. The effective dates for these changes are staggered, with some provisions taking effect retroactively from January 1, 2025, and others implemented through 2032.

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