H.829, which now heads to the Senate, includes new personal income tax bracket for income over $500,000 in order to make crucial investments
Vermont Business Magazine A measure that would increase taxes on Vermont’s wealthiest residents gained final approval from the Vermont House today in a vote of 97-42. The bill, H.829, now moves to the Senate.
If enacted, the bill would create a new tax bracket, increasing tax rates by 3% points on marginal income over $500,000 (which would be a 34.3% increase from 8.75% now to the higher 11.75%). This tax change would raise over $74 million annually in state revenue and only affect the top 1.1% of Vermont taxpayers. The revenue is intended to fund long-term housing investments.
Advocates praised the House of Representatives’ vote, citing urgent needs across the state and skyrocketing income and wealth inequality, as well as strong public support for increased taxes on the wealthiest Vermont residents.
James Lyall, Executive Director of the ACLU of Vermont, highlighted the need to update our state’s tax code. Said Lyall, “We see that our state has significant unmet needs, at the same time as Vermont is experiencing growing income and wealth inequality. By increasing taxes on those most able to pay, our state can raise substantial revenue to ensure that all Vermont residents have the opportunity to thrive.”
Through approval of this legislation, Representatives showed their commitment to addressing the needs of Vermonters and supporting their constituents. Increasing taxes on those most able to pay is supported by a majority of Vermont residents, they said, as well as advocates from leading statewide organizations.
“This vote demonstrates the Vermont House of Representatives’ dedication to building a Vermont that works for everyone who lives here,” said Anika Heilweil, Campaign Manager for Fund Vermont’s Future, a coalition that supports the Fair Share for Vermont Campaign to increase taxes on the wealthiest Vermont residents to raise state revenue. “Voting in support of legislation to create a new tax bracket for Vermont’s highest earners shows that our legislators support their constituents, support responsible mechanisms to raise revenue, and support a government that works for all Vermonters.”
The Fund Vermont’s Future coalition commends the House and is urging the Senate to pass the bill. The coalition began advocating for a 3% tax increase on marginal income over $500,000 in November, launching the Fair Share for Vermont Campaign. The coalition includes the ACLU of Vermont, Public Assets Institute, Vermont Conservation Voters, the Vermont Early Childhood Advocacy Alliance, the Vermont Natural Resources Council, the Vermont-NEA, Voices for Vermont’s Children, and several individuals.
With withstand a possible veto by Governor Scott, who has voiced opposition to any tax increases, the House would need a two-thirds majority of those voting. There are 150 members. If every member were to vote, it would require 100 votes to override a veto.
More information is available at fairsharevt.org.
“Vermont’s housing and homelessness crises will take sustained long-term investments to fully solve,” said Frank Knaack, executive director of the Housing and Homelessness Alliance of Vermont. “This legislation creates the foundation necessary to solve this crisis and build a Vermont where housing is no longer just an aspiration, but a reality for all Vermonters. We thank the House for recognizing this imperative and urge the Senate and Governor to do the same.”
H.829 would also strengthen housing access, specifically adding people with disabilities to the Vermont Housing Improvement Program and to Vermont Housing and Conservation Board's priorities.
"H.829 will create more accessible housing in Vermont. H.829 is game changing for housing developers and life changing for Vermonters with disabilities," says Kirsten Murphy, executive director of the Vermont Developmental Disabilities Council.
H.829 also lowers the transfer tax paid on the first $200,000 of the sales prices of property when it is sold (for principal residences), giving an approximately $900 tax break for every buyer of homes under $750,000. The transfer tax collected on the value of property sold in excess of $750,000 is adjusted from 1.25 percent to 3.65 percent. For context, according to data collected from the Tax Department by the Vermont Housing Finance Agency, the median home sale price in Vermont in 2023 was $325,000, ranging from a median home sale price of $185,000 in Essex County to $460,500 in Chittenden County. Under H.829, approximately 93 percent of homebuyers in 2023 would have received a tax break.
In addition, it would create a new personal income tax bracket for taxable income in excess of: $500,000 (filing jointly), $455,350 (filing as head of household), $410,650 (unmarried), and $250,000 (married, but filing separately).
"By supporting increased taxes on the highest-income Vermont residents to raise crucial state revenue, the legislature is demonstrating support for all Vermont families," said Anika Heilweil, Campaign Manager for the Fund Vermont's Future Coalition and Fair Share for Vermont Campaign. "We know that Vermonters are facing many unmet needs, which require public investment. At the same time, the state is experiencing skyrocketing income and wealth inequality. This new tax bracket will raise substantial state revenue to meet our state's needs, while only affecting the wealthiest Vermont residents."
H.829 will now move to the Senate for consideration.
