The bill aims to address Vermont’s workforce shortages in construction, health care, and manufacturing by leveraging the skills of military retirees and their spouses. The bill also builds on the 2024 establishment of the Office of Workforce Strategy and Development to enhance workforce coordination.

The Details:

• Tax Exemptions for Military Retirement Income

  • Excludes U.S. military retirement income and survivor benefit income from Vermont taxable income, effective retroactively from January 1, 2025.
  • Repeals outdated provisions and clarify that taxpayers eligible for multiple retirement income exclusions (e.g., Social Security or other contributory systems) must elect only one exclusion.
  • Rationale: The McClure Foundation and Department of Labor identified high-demand jobs with median wages above $30/hour and at least 300 openings projected between 2022-2032. Veterans’ skills align well with these sectors.

• Assigns specific duties to the Commissioner of Labor and the Executive Director of Workforce Strategy and Development to strengthen workforce leadership.

  • Commissioner of Labor Responsibilities:

    • Administer workforce programs under the federal Workforce Innovation and Opportunity Act (WIOA).
    • Coordinate training programs, develop reemployment strategies, and reduce layoffs.
    • Maintain a free electronic job board and collect individual-level data (using Social Security numbers or equivalents) to align programs with workforce and employer needs.
    • Require businesses and training providers receiving state funds to submit detailed reports on training outcomes.
  • Executive Director Responsibilities:
    • Advise the Governor on workforce system integration.
    • Develop a comprehensive workforce strategy with measurable goals and a biennial operational plan.
    • Maintain an inventory of all workforce programs to assess effectiveness and avoid duplication.
    • Facilitate communication between businesses, government, and educational institutions to support job placement and pipeline development.
• Requires the Agency of Commerce and Community Development, in consultation with the Office of Workforce Strategy and Development, to submit annual reports to legislative committees. Reports will detail marketing efforts to recruit military personnel and include data on outcomes.
  
  
• Directs the creation and maintenance of a publicly accessible inventory of workforce education and training programs.
  
  

Analysis:

The focuses on incentivizing military retirees to join Vermont’s workforce through tax relief and strategic recruitment, while enhancing workforce development coordination among various departments and agencies. 

Additionally, we hope the reports required in the bill will help assess the effectiveness of the workforce development system and identify best practices. It also requires the Executive Director to issue a comprehensive biennial workforce report to the Governor and relevant legislative committees, summarizing the accomplishments and performance of the workforce investment system. Over time it seems likely this will lead to more effective distribution of resources.

The Department of Defense reports that Vermont has a significant number of military retirees, with 3,594 receiving pay and an average monthly pension of $2,757. The estimated local spending by military retirees in the state is around $99M annually.

The estimated cost of this exemption is $3.9M, which is likely quite small compared to the potential economic benefits. The average age of military retirees is around 47, and they often possess valuable skills and leadership training that can benefit Vermont's workforce.

Current Status:

The bill has passed the House and is being reviewed by the Senate Finance Committee after being amended by the Senate Economic Development Committee.

Last updated: 5/20/2025

DISCLAIMER: Generative AI used to assist in the production of this report.