Senate rejects surtax amendment but passes H 9 33 after multiple floor fights

A proposed surtax package to recapture federal tax-cut windfalls for the state failed on the Senate floor Tuesday, and the chamber then passed H 9 33 as amended.

Senator Bihofsky, the amendment sponsor, described the package as a combination of a 6% surcharge on the top 1% of Vermont earners (those with incomes over $500,000), a 2% surcharge on the next 5% (incomes $250,000–$499,999), and an investment‑proceeds tax targeting certain unrealized gains. The sponsor said the overall bill package was estimated to generate a little more than $400 million and framed the change as bringing federal windfalls into the Vermont budget to support social programs: "There would be a 6% surcharge added to the top 1% of Vermont earners," the sponsor said during floor remarks and described the distribution and intent of the surcharges.

Opponents voiced concerns about complexity, fairness and economic impacts. The Senate Finance committee cautioned that using federal taxable income as the tax base would require new forms, filings and computer programming for the Department of Taxes and that the committee had not had time to fully assess administrative costs. One senator argued that the proposal would "set up a parallel taxing system" and warned of long‑term, permanent surcharges rather than time‑limited revenue measures.

After extended questioning on exclusions for one‑time income events, the accuracy of polling cited by the sponsor, and the lack of a complete Joint Fiscal Office estimate on the amendment as presented, the body took a roll‑call vote. The clerk announced 2 votes in favor and 27 opposed; the amendment failed.

Separately, the Senate considered a floor amendment offered by the senator from Rutland to exempt taxpayers aged 30 and under from Vermont income tax beginning Jan. 1, 2028. Sponsors and proponents framed the measure as a targeted incentive to retain young workers and encourage economic development, and floor remarks cited an estimated initial revenue impact (a figure on the floor ranged from $25 million in year one to $50 million in later years). Finance had not fully reviewed the proposal, and the amendment failed on a roll call, 11–16.

Earlier in the day the chamber adopted a different floor amendment offered by Senator White to adjust local option and pilot fund splits tied to an $18,000,000 threshold; that amendment was adopted by voice vote and incorporated into H 9 33. The Senate then ordered third reading and passed H 9 33 as amended.

Votes at a glance

- Amendment (surcharge package, offered by Senator Bihofsky): Roll‑call — Yes 2, No 27 — FAILED.
- Amendment (exempt taxpayers age 30 and under, offered by senator from Rutland): Roll‑call — Yes 11, No 16 — FAILED.
- Amendment (White — local option/pilot fund adjustment): Voice vote — ADOPTED.
- Final: H 9 33 — Passed on third reading (voice vote announced by the presiding officer).

What’s next

Sponsors and committee chairs said they will continue committee work on tax policy and that JFO/fiscal analysis is needed before pursuing large structural tax changes. The Senate adjourned and is scheduled to reconvene at 9:30 a.m. Tuesday, May 5, 2026.