The bill H.74 proposes a phased implementation of a full income tax exemption for Social Security benefits in Vermont over eight years, significantly increasing the income thresholds for these exemptions. Currently, there is a partial exemption, but under the new legislation, the income limit for single filers will rise from $50,000 to $65,000 in the first year, and for married couples filing jointly, it will increase from $65,000 to $80,000. By the end of the eight-year period, these thresholds will reach $107,000 for single filers and $122,000 for married filers. The bill also details how the percentage of benefits excluded will be calculated for those whose incomes fall between the specified thresholds.

In addition to raising the income thresholds, the bill amends the current tax code by increasing the full exclusion thresholds for single taxpayers from $117,000 to $127,000 and for married couples from $132,000 to $142,000. The phase-out ranges are also adjusted accordingly. Furthermore, the bill repeals certain provisions related to the exclusion of Social Security income and clarifies that all federally taxable benefits received under the Social Security Act will be exempt from taxation. The aim of H.74 is to alleviate the tax burden on Vermonters who depend on Social Security benefits, with various sections of the bill set to take effect between January 1, 2025, and January 1, 2032.

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