Bill S.308 proposes to amend the current law regarding the taxation of military retirement income in Vermont by eliminating the income-based eligibility requirements for the exclusion of such income from taxation. Specifically, the bill removes the stipulations that limited the exclusion based on the taxpayer's federal adjusted gross income, which previously allowed full exclusion for incomes up to $125,000, a proportional exclusion for incomes between $125,000 and $175,000, and no exclusion for incomes above $175,000.

The new legal language will allow all U.S. military retirement income and U.S. military survivor benefit income to be excluded from taxable income for taxpayers of any filing status, regardless of their income level. Additionally, the bill includes a provision stating that it will take effect retroactively on January 1, 2026, and will apply to taxable years beginning on and after that date.

Statutes affected:
As Introduced: 32-5830e