Senate sponsor revisits bill to fully exempt military retirement from state income tax

Sen. Brock (sponsor) and colleagues discussed S.308, legislation that would expand a recent partial exemption of military retirement income by removing a phase-out cap and exempting all military retirement income from Vermont’s state income tax.

Supporters told the committee the state had been one of the few that taxed most military retirement income and that the partial exemption enacted last session phased out between roughly $125,000 and $175,000 of AGI; the current bill would eliminate that phase-out and make the exemption universal for military retirement income. Proponents argued such an exemption would help attract military retirees with in-demand skills — electricians, plumbers and other trades — to live and work in Vermont.

Committee members discussed trade-offs and possible impacts on revenue and economic development; the bill sponsor asked the Tax Department and JFO to provide impact information. No final vote was recorded on Jan. 30.