Bill H.135, introduced by Representative Canfield, proposes several updates to Vermont's tax laws, including aligning state regulations with federal standards effective December 31, 2024. Key changes include a requirement for spouses or surviving spouses to file joint Vermont personal income tax returns if they do so federally, unless otherwise permitted by the Commissioner. The bill also modifies definitions related to the tobacco products tax, increases compensation for property tax hearing officers, and raises the age limit for qualifying children under the Vermont Child Tax Credit from five to six years. Additionally, it revises the Earned Income Tax Credit to provide a 100% credit for individuals without qualifying children and includes provisions for excluding U.S. military retirement income.

The bill further addresses financial relief for municipalities impacted by flooding declared a federal disaster between July 1, 2023, and December 31, 2024, allowing for reimbursement of unanticipated interest expenses incurred from borrowing funds for state education property tax payments, capped at eight percent of reasonable interest expenses. It also amends property tax credit claims by removing the previous allowance for municipalities to retain $15.00 for late claims, replacing it with a retention of 0.225% of total education tax collected, contingent upon timely remittance. Additionally, the annual cap on tax credits awarded by the State Board to qualified applicants is increased from $3,000,000 to $5,000,000, with specific effective dates for various sections of the act to ensure timely relief and compliance with tax regulations.

Statutes affected:
As Introduced: 32-5824, 32-7402, 32-5861(c), 32-5861, 32-5830f, 32-5828b, 32-5811(21), 32-5811, 32-5830e, 32-7702, 32-4465, 32-5402(c)(2), 32-5402, 32-5402(c), 32-5930ee