By Michael Bielawski

Today, lawmakers and the governor will gather to celebrate the signing of a long-awaited bill to reduce taxes on military retirement and survivor benefits. However, the bill comes coupled with initiatives that would allow residents to receive public benefits if they lack a tax identification number.

There have been years of frustration over Vermont being one of the last states in the nation to tax military retirement pay.

No tax ID for benefits

The bill (S. 51, as passed by the House and Senate) lists two public benefits that would become accessible to those lacking a tax ID number. One is the Vermont Child Tax Credit. A resident “who would have been entitled to a child tax credit under the laws of the United States but for the fact that the individual or the individual’s spouse does not have a taxpayer identification number shall be entitled to a refundable credit against the tax imposed by section 5822 of this title for the taxable year.”

Similarly, the Earned Income Tax Credit section states that a resident who would have been granted this credit under US law but “does not have a qualifying taxpayer identification number” should nonetheless “be entitled to a credit.”

Polling by VeteransHelpGroup.org indicates that many veterans may not support benefits for those who are undocumented. It reveals that their top political concerns are, with 44% saying it’s the high cost of living/inflation, 41% saying immigration, and 31% saying the economy.

Under existing law, there is an option for undocumented immigrants to obtain an Individual Tax ID Number, or ITIN. According to EasyFiling.US, “While an ITIN does not provide legal immigration status or a work permit, it greatly helps in meeting tax requirements, maintaining specific financial accounts, and even improving one’s immigration case.”

Attached to relief for veterans

Vermont has long been singled out as one of only a few states in the nation allowing for any kind of tax on military benefits. Some portions are contingent upon the applicant’s income level. 

Recently, in the Brattleboro Reformer, a commentary called to drop Vermont’s taxes on retirement pay. It is penned by Reps. Laura Sibilia, I-Dover, Lisa Hango, R-Berkshire, and Sen. Joe Major, D-Hartford. The letter expresses strong support for veterans, but it makes no mention of the provisions concerning tax ID requirements.

“Service members, and their families, make sacrifices that most civilians will never fully understand. They leave behind their homes, face dangerous deployments, and live with the physical and emotional tolls of their service. Yet, despite these sacrifices, Vermont continues to tax military pensions and military survivor benefits above a small exemption, unlike every other New England state and our New York neighbors.”

In a recent report by WalletHub titled “The Best and Worst States for Military Retirees in the USA: A Comprehensive Guide,” Vermont is the third-worst state for military personnel to retire in.

They report that the Green Mountain State, “Vermont offers limited options for military retirees. Veterans face a high cost of living, especially in housing. Financial support includes a one-time payment of up to $500 for emergencies, and veterans may receive tax exemptions for disability pay. However, employment opportunities are scarce, affecting many retirees’ financial stability.”

Michael Bielawski is a freelance news writer writing for the Vermont Daily Chronicle