Act 169 sets Vermont’s fiscal year 2027 (2026–2027 school year) education property tax calculation (known as the yield amount), adds temporary renter credit relief and changes to the excess spending rules, and makes several technical education finance changes.
The yield function as a threshold by which local school districts compare their spending in order to calculate their tax rate. For example, if the statewide yield amount is $10,000 and your district is spending $15,000 per student. Your local tax rate would be 50% higher than the statewide tax rate because your spending is 50% above the yield amount.
The yield amount refers to how much tax revenue per student a $1.00 statewide tax rate generates or "yields." In the example above, the local district's tax rate would be $1.50 per $100 of assessed value as a result of this formula. There are other factors playing in here as well such as the Common Level of Appraisal (CLA) that adjusts the final tax rate and the fact that the cost per student is weighted to account for students that the state thinks cost more to educate. These two adjustments can also wreak havoc on the stability of local tax rates.
The Details:
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Sets fiscal year 2027 (FY27) education tax benchmarks by establishing the homestead property dollar equivalent yield at $9,401, the income dollar equivalent yield at $12,960, and the non-homestead property tax rate at $1.643 per $100 of equalized education property value. These numbers are slightly different from the Senate proposal and replace the earlier House numbers of $9,170, $12,576, and $1.698.
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On average, property tax payers can expect a 3.5% increase in their bills for FY2027 based on the yields set in Act 169.
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Uses one-time funding assumptions to support those rates, including a $104.9 million General Fund transfer to the Education Fund and the estimated FY26 Education Fund surplus.
- The earlier House version reserved $52.45 million in the Education Fund to help offset education property tax rate increases in FY28 and directed the Commissioner of Taxes to treat that reserve as available in the December tax rate letter. That reserve provision was removed in the Senate version.
- Makes a technical correction to the statewide adjustment language used in the property tax credit system.
- $150,576 is paid to the City of Barre to reimburse education property tax overpayments from fiscal years 2021 through 2024 tied to insufficient retention of a TIF increment.
- Adjusts the special education census block grant uniform base amount to $2,350 for FY27 and requires annual inflation adjustments to the grant beginning in FY28 using a three-year average inflation measure for state and local government spending.
- Phases in a lower excess spending threshold over time rather than dropping immediately (as had been proposed by the Senate). Beginning in FY28, the threshold transitions from 115.5 percent in FY28 to 114.5 percent in FY29, 113.5 percent in FY30, 113 percent in FY31, and 112.5 percent in FY32.
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Caps tuition growth for public and approved independent receiving schools in fiscal years 2028–2032 so that annual tuition increases may not exceed the relative percentage change in statewide education spending from the prior year.
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For claim year 2027, the maximum renter credit increases from $2,500 to $3,250, and the percentage used to calculate the credit increases from 10 percent to 12.5 percent of fair market rent or gross rent paid for eligible renters receiving subsidies.
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Beginning with claim year 2028, the renter credit returns to the current-law maximum of $2,500 and the 10 percent calculation, even as the broader circuit breaker changes take effect
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Beginning in FY28, the homestead property tax credit income threshold increases from $47,000 to $50,000 for certain credits, the municipal property tax credit maximum rises from $2,400 to $2,600, and the cumulative credit maximum rises from $5,600 to $6,000.
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Core tax-rate and technical sections take effect July 1, 2026; the one-year renter credit expansion applies to claim year 2027; the excess spending and circuit breaker changes generally begin in FY28; the tuition cap applies in FY28–FY32; and some conforming changes take effect in 2029.
The Good:
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The Bad:
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Analysis:
This bill is still best understood as both an annual yield bill and a short-term education finance management bill. It sets the yield amount needed to run the education financing system for FY27, but the final enacted version changes how the Legislature is trying to manage pressure in the following years. The House version used a two-year reserve strategy to spread one-time money across FY27 and FY28. The Senate removed that reserve approach, changed the yields and rates, and added temporary renter credit relief along with new excess spending rules. The final version largely follows that Senate direction, but with some important refinements, including a slower phase-in of the excess spending penalty changes, a broader circuit breaker expansion beginning in FY28, and a temporary tuition growth cap.
That shift changes the bill’s trade-offs. The House approach prioritized smoothing tax impacts over two years to avoid a larger fiscal cliff in FY28. The enacted approach instead offers a different mix of relief and constraint: updated tax rate settings for FY27, one-year renter support for eligible tenants, expanded homeowner tax-credit protections beginning in FY28, and tighter excess spending rules that phase in over several years. Reasonable people may disagree about whether that is a better balance. Some will prefer direct tax relief and stronger incentives to limit school spending growth. Others will see the loss of the FY28 reserve as increasing future uncertainty and the lower excess spending threshold as adding pressure to districts already dealing with enrollment decline, fixed costs, or special education volatility.
There are still real trade-offs in how the bill uses public resources. One-time funding can help blunt immediate tax pressure, but it does not solve the deeper mismatch between Education Fund spending growth and non-property revenues. The temporary renter credit expansion may help some Vermont households in the near term, but because it sunsets after one claim year, it does not create a stable long-term affordability policy. The broader circuit breaker changes beginning in FY28 provide a more durable form of relief for some homeowners, but they do not eliminate the complexity of Vermont’s education tax system. Likewise, the phased-in excess spending changes may be easier for districts to absorb than an immediate drop, but they still create incentives and constraints that may affect local budget decisions over time.
Overall, Act 169 remains a pragmatic but incomplete response to Vermont’s education finance strain. It updates the tax rates, preserves several technical corrections, adds targeted renter and homeowner relief, and puts new limits on excess spending growth and tuition growth. But it also underscores that Vermont still faces unresolved decisions about how to finance education in a way that is understandable, equitable, and sustainable.
CFV has written to the House Ways & Means Committee expressing an opinion on the Senate changes to H.949.
Current Status:
The bill was passed by the House and Senate and signed by the Governor on June 18, 2026. The bill will now become law.
Last updated: 6/20/2026
DISCLAIMER: Generative AI used to assist in the production of this report.
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