Low-income parents, seniors on Social Security and military veterans will all see tax cuts next year under legislation that cleared its final hurdle in the Vermont Legislature Monday.
The bill represents one of the biggest state income tax breaks in recent memory. And it marks the culmination of Republican Gov. Phil Scott鈥檚 nearly decade-old push to exempt most military pensions from state income taxes.
Vermont is . The Scott administration says that鈥檚 made it more difficult to recruit and retain military retirees who often begin second careers in their 40s and 50s.
鈥淲e hear all the time stories ... from career military folks who might be an engineer, they might be a plumber, they might be an electrician, who want to continue to contribute to the workforce, but they choose other places to live because every other state provides that income tax exemption,鈥� Scott鈥檚 Director of Policy Jason Maulucci said last month.
According to the Legislature鈥檚 Joint Fiscal Office, Vermont has 3,593 military retirees receiving pensions benefits. Nearly half would qualify for a full exemption under the House bill, and 627 would receive a partial exemption.
The provision is part of a that will expand the child tax credit, increase the earned income tax credit for workers without children, and lower state taxes on Social Security benefits.
Income-eligible parents can currently qualify for $1,000 child tax credits annually for kids up to age 5; the bill will allow them to collect the credit up to age 6. Meanwhile, the maximum earned income tax credit for low-income workers without children .
What I鈥檇 like to see more in our tax policy, in the whole country and in Vermont, is addressing the income inequalities that are getting larger generationally.Chittenden County Sen. Thomas Chittenden
The legislation won final approval in a unanimous vote on the Senate floor Monday morning. Chittenden County Sen. Thomas Chittenden, a Democrat who helped negotiate the package, said expanding the child tax credit and earned income tax credit are part of a broader push for economic justice.
鈥淲hat I鈥檇 like to see more in our tax policy, in the whole country and in Vermont, is addressing the income inequalities that are getting larger generationally,鈥� Chittenden said.
Senate lawmakers had hoped to include a new tax credit for unpaid caregivers. But tax department officials said it would be difficult to determine how many people would qualify for the credit, and how much revenue the state would forego by offering it.
