Vermont Business Magazine Vermont Commissioner of Taxes Bill Shouldice today released the December 1 education tax rate letter, which forecasts the education tax yields for resident homeowners and the non-homestead tax rate for the upcoming fiscal year (FY) 2027.
This year’s letter projects education property tax bills to increase by a statewide average of 11.9%r.
The Vermont Legislature last session agreed to cap the education property tax increase at 1.1% for FY26, which reduced the rate from a projected 5.9% increase. The short-term measure resulted from a deal between Governor Scott and lawmakers to provide some relief from rising property taxes.
For FY26, a buydown of rates used $118 million, paid for by a mix of surplus general and education fund tax dollars ($77 million from the general fund and $41 million from the education fund).
The FY25 increase was nearly 13.8% and resulted in Republicans gaining several seats in the Legislature in the subsequent 2024 general election.
The letter released today is based on specific calculations outlined in state law and is a result of collaboration between the Department of Taxes, Agency of Education, Department of Finance and Management, and Legislative Joint Fiscal Office.
Commissioner Shouldice writes in the letter: “If this increase takes effect, Vermonters’ property taxes for education will have gone up nearly 41% over the past five years. If we allow this landscape to persist, we cannot seriously expect young and growing families to buy homes and settle in Vermont; local voters to approve budgets; or seniors on fixed incomes to retire comfortably in Vermont.”
The December 1 letter is based on projections and assumes no other policy changes happen. If voters ultimately approve less in education spending than the projections used in the letter, then property taxes will be lower. If the General Assembly transfers in additional revenue or modifies other expenditures from the Education Fund, this can also lower property taxes.
Additional resources, including background information on the December 1 letter and education tax rates frequently asked questions are available on the Department of Taxes website.
Governor Phil Scott today issued the following statement on the annual December 1 tax letter released by the Department of Taxes:
“The Department of Taxes has released its annual forecast of the education property tax rate, which once again shows, without intervention from Montpelier and/or school boards reducing spending growth, Vermonters will face an average 12% increase next year.
“It should come as no surprise that I find this totally unacceptable, as I’ve been ringing the alarm – and proposing meaningful reforms – for years.
“Last year, Vermonters went to the polls and made it very clear how they feel about property taxes increasing over 40% in the last five years alone, while student enrollment, performance and opportunities decrease. That’s why we presented a thoughtful plan to the Legislature last session that addressed the changes needed, so the system works better for our kids, teachers, and taxpayers.
“But to achieve the outcomes we’ve all agreed are important, the Legislature must follow through on the commitments made in Act 73. This legislation charts a new, more affordable, and higher quality course. When implemented, it will reduce unnecessary and duplicative overhead and bureaucracy to ensure more of every dollar actually reaches our kids.
“In order to move forward with the much-needed transformation – including a fairer and more sustainable funding system – this session, legislators must approve a new, modern, equitable governance structure that reflects the fact that we are now educating 20% fewer K-12 students than we were 20 years ago, and provides greater opportunity for all students. If we follow through, we can provide new, and higher quality standards for all of our kids.
“I’m ready to follow through on these objectives, despite the efforts of those who are determined to preserve a failing system that promises more of the same: declining test scores at ever increasing costs.
The choice before lawmakers in 2026 is clear: show courage by working together to keep moving forward with our bipartisan transformation plan or explain to Vermonters why yet another double-digit tax increase is acceptable, and why we’ll continue to see them well into the future if we abandon our efforts.”
House Speaker Jill Krowinski (D-Burlington)
“Today, we received another double digit estimated property tax projection,” said Speaker Jill Krowinski. “The continued growth in our property taxes is unsustainable and unaffordable for Vermonters across the state, and is forcing school districts to make difficult cuts that are impacting our students. Last year, we passed comprehensive legislation to transform our education system and today’s property tax projection is a reminder why this critical effort must continue. There are more tough conversations and difficult decisions ahead, and we must keep Vermont's kids at the center.
“Act 73 has spurred many discussions since it was enacted last spring and Vermonters have been engaged in helping to chart the path forward for our education system. As is the case with most legislation, there are a wide range of opinions on the direction we should take moving forward. It’s important for all of us to remember that the challenges before us are decades in the making and we will continue to see double digit property tax projections and loss of educational opportunities for kids if we do nothing. This coming legislative session, we can make real, meaningful change to provide better educational opportunities for our kids. Taking no action is not an option.
“The education system is the largest taxpayer funded system we have in Vermont, supporting kids and families in every community - there is no one single policy change that will fix the problem before us. Legislation we passed last year, including health care reform initiatives, are already making a difference in lowering the cost It will take a variety of changes to make a difference and we must be united in our mission to make sure that our public schools have the resources they need to support all of our kids, at a price that Vermonters can afford.”
Senate President Pro Tempore Phil Baruth (D-Chittenden Central)
“Each year, as required by law, the Tax Commissioner releases an estimate of the coming year’s property tax rates in what’s known as the ‘December 1 letter.’ This year’s projection pegs the average property tax bill increase at 11.9 percent. We’ve seen this movie again and again over the last handful of years. This pattern absolutely cannot continue.
“Last session, the Governor and the Legislature worked together to pass a framework for transforming our education financing system. It was not easy; too many opposed any approach but the status quo. But as this year’s letter makes clear, we can’t just feed more and more taxpayer dollars into an unreliable and volatile system.
“The truth is that Act 73’s success depends on even harder work being accomplished this session. I am committed to continuing this mission - in collaboration with the Governor, the House and my colleagues in the Senate - to advance reforms that will foster an equitable education system for all of Vermont’s children at a price that's affordable, predictable and stable for Vermont’s families. But we will need Vermonters' support to make it happen."
House and Senate Response to Education Tax Letter
Senator Scott Beck, Senate Republican Leader, Rep. Pattie McCoy, House Republican Leader
"Today, the Vermont Tax Department released its annual forecast on the 2026 property tax implications of Vermont’s PreK–12 education system.
"According to the report, the statewide average property tax increase is projected to be 11.9%. School districts are expected to increase education spending by $115 million, with per-pupil spending increasing by nearly $1,000 — a 6.8% jump. These increases are more than double inflation, economic growth, wage growth, and the growth of Vermont’s General and Transportation Funds, both of which are dealing with higher health insurance premiums. Even more troubling is the long-term trend: education property taxes have risen 41% over the past five years. This is not acceptable.
"It’s important to emphasize that this projection is not a foregone conclusion. School districts still have the opportunity to revise and reduce their budgets. Additionally, the Legislature could allocate General Fund dollars to help offset property tax increases. However, those same dollars are also needed to support critical services Vermonters depend on — including public safety, food insecurity, healthcare, housing and homeless assistance, and other necessary social programs.
"Republicans are deeply concerned that despite nearly the highest per-pupil education spending in the nation, Vermonters are seeing diminishing returns: declining reading and math scores, deteriorating school infrastructure, low post-secondary enrollment, a rising dropout rate, and the highest staffing ratio in the country, 3.4:1.
"Senate and House Republicans are committed to controlling education costs and reforming Vermont’s education system into one that delivers real value and outcomes we can be proud of. The Foundation Formula in Act 73 was a step in the right direction. We are ready to work with the Administration and Democrats who recognize the serious nature of the challenge and are committed to meaningful reform.
"What we cannot support are proposals that ask for even more taxes from already overburdened taxpayers. Vermont doesn’t have a revenue problem; we have a spending problem."
12.1.2025. www.vermont.gov
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