Miscellaneous Tax Bill (Act 164 / H.933) - Overview & Analysis

Act 164 makes a broad set of administrative and policy updates to Vermont’s tax laws and related programs, including property and income taxes, education funding, housing, school-related scholarships, municipal administration, conservation lands, and economic-development tax credits.

The Details:

• Changes property-transfer tax treatment for certain second-home purchases. The act applies a 3.4 percent property transfer tax rate to year-round residential property that will not be the buyer’s principal residence and is not subject to a landlord certificate. It also authorizes the Tax Commissioner to assess that rate when a purported rental arrangement is not a bona fide landlord-tenant relationship.

• Updates Current Use and land-use-change tax administration. The act establishes deadlines and fallback procedures for setting the fair-market value of land withdrawn from Current Use or developed, allows 30 days for appeals, and changes how land-use-change tax proceeds are distributed when municipal assessors do or do not meet their valuation deadline.

• Adjusts municipal property-tax procedures and oversight. It revises deadlines for certain appeals and objections, clarifies parcel definitions for specific mapping and payment purposes, repeals outdated State supervision provisions for delinquent municipal tax collection, and sets rules for valuation reporting on communications property.

• Supports flood-affected municipalities. The municipal grand-list stabilization payment for eligible flood-damaged or flood-prone property is calculated using the prior year’s municipal and submunicipal tax rates and is payable annually for five years.

• Extends the Health IT Fund. The act delays the Health IT Fund sunset from July 1, 2026 to July 1, 2031.

• Updates inflation measures used in education law. It replaces references to an older price-index description with the current federal measure used to adjust school procurement renewals, Medicaid reimbursement incentives, the base education amount, and the excess-spending threshold.

• Revises property-tax treatment for certain households and estates. A person jointly owning a homestead with a spouse who is outside the household during a pending divorce or separation case may be treated as responsible for 100 percent of the property tax. The act also raises the Vermont estate-tax filing threshold from $2.75 million to $5 million.

• Expands support for homeownership assistance. It raises the annual cap on first-year tax-credit allocations for the Down Payment Assistance Program to $350,000 for fiscal years 2027 through 2031.

• Creates a State process for participation in a federal education scholarship tax-credit program. The Governor or designee may submit a list of qualifying nonprofit scholarship-granting organizations to the federal government. Eligible organizations must serve economically underprivileged students through educational enrichment programs, use participating public or publicly tuitioned independent schools, follow nondiscrimination requirements, and report detailed scholarship, donor, spending, and governance information to legislative education committees.

• Maintains public access while updating Fish and Wildlife fee authority. The Department may set fees for specified licenses and conservation-camp tuition through rulemaking, but it may not require a license or permit simply to access Department lands. Existing fee rules remain in effect through June 30, 2027, and the Department must recommend statutory fees to the Legislature by January 15, 2027.

• Moves the annual property-tax assessment date from April 1 to January 1. The act makes this change across numerous property-tax, grand-list, homestead, Current Use, and payment-in-lieu-of-taxes provisions. The change generally takes effect July 1, 2031, for grand lists lodged afterward.

• Requires a 10-year study of Vermont’s tax system. Subject to funding, the Joint Fiscal Office must examine long-term tax trends, comparisons with other states, effects on households and businesses, tax avoidance and enforcement gaps, aging demographics, and benefit cliffs. The report is due January 15, 2027, and the act appropriates $100,000 in fiscal year 2027 for the work.

• Aligns and selectively decouples Vermont income-tax law from federal changes. The act adopts the federal tax code through December 31, 2025 while preserving Vermont-specific treatment of bonus depreciation, research and experimental expenses, and qualified small-business stock. It provides rules for recovering certain deductions over time and makes several provisions retroactive for recent tax years.

• Strengthens incentives for in-state research and development. Beginning with tax year 2027, the Vermont research and development credit rises from 27 percent to 75 percent of the related federal credit for qualifying expenditures made in Vermont. The act also increases the annual cap for certain economic-development tax credits from $3 million to $3.5 million.

• Adjusts Education Fund revenue deposits. It changes the shares of meals-and-rooms tax and purchase-and-use tax revenue directed to the Education Fund in fiscal years 2027 and 2028, while expressing legislative intent to shift more motor-vehicle purchase-and-use tax revenue to transportation in future years without increasing statewide education property taxes.

• Clarifies Burlington Waterfront tax-increment-financing treatment. The act confirms the retention framework for specified parcels through June 30, 2035 and requires Burlington to submit an updated plan by November 15, 2029 so the Vermont Economic Progress Council can determine whether retention percentages can be reduced while still covering remaining debt.

   

Analysis:

Act 164 is primarily an omnibus tax-administration measure, but its effects extend beyond tax filing. It changes how Vermont administers property transfers, Current Use land, municipal grand lists, income-tax conformity, education-related revenue, and economic-development incentives. Several provisions are technical corrections or timing changes, yet the act also makes consequential policy choices: it raises the estate-tax filing threshold, increases the research and development credit, directs more resources toward down-payment assistance, and applies a higher property-transfer-tax rate to certain non-primary residences.

The education provisions present both opportunity and accountability questions. The federal scholarship-tax-credit process could expand access to tutoring, summer learning, and afterschool opportunities for economically underprivileged students. Its requirements for school connections, nondiscrimination, and annual public reporting are meaningful safeguards. At the same time, the State will need to monitor whether reporting is complete, whether scholarships reach students with the greatest unmet needs, and whether administrative requirements are manageable for smaller organizations. Reasonable people may differ about how much State involvement in a federally subsidized scholarship program is appropriate, even with these guardrails.

The act’s revenue choices also involve trade-offs relevant to Vermont families and schools. Research credits and homeownership assistance may support economic opportunity and household security, while changes to Education Fund deposits and other tax provisions could affect the stability of State revenue available for schools and other services. The required 10-year tax study is therefore particularly important: a clear public analysis of who pays, who benefits, and how revenue changes over time can improve accountability and help identify inequities or unintended benefit cliffs.

Finally, the administrative provisions seek to make tax systems more consistent and workable, especially through clearer deadlines and the eventual January 1 assessment date. However, large procedural transitions require training, software updates, public communication, and close coordination among the Department of Taxes, municipalities, assessors, and taxpayers. The bill’s practical success will depend not only on the statutory changes but also on transparent implementation, accessible guidance, and ongoing evaluation of impacts on Vermonters.

Current Status:

Act 164 (H.933) passed the General Assembly and was signed into law by the Governor on June 18, 2026; most provisions took effect upon passage, with specified provisions taking effect on later dates.

Last updated: 7/15/2026

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