by Lake Champlain Chamber
Vermont is a high-tax state, the fourth highest, to be exact. However, it feels as if this year, we’re trying to take the title of the highest in almost every category.
Let’s take a look at what the Legislature may do this year.
First, let’s not forget that in July, you or your employees will start paying a 0.44% payroll tax, which will amount to $92 million in FY 26 as a result of last year’s legislation.
The House voted to create a new top marginal bracket for those making ~$410,000 ($500,000 married filing jointly), which is the highest marginal tax bracket for that income level in the U.S.
Property taxes are on a trajectory to increase by over 18% (though they can be as high as 30% in some districts) to make up the newly revised $197 million gap in the education fund.
However, the Legislature is looking to buy down that rate spike by likely levying new taxes on online services of all kinds, a 10% surcharge on short-term rentals, and possibly some tax on sugar-sweetened beverages.
The House has now passed a doubling of the property transfer tax.
No matter what is done, nationally, Vermont will rank as having the highest property taxes to fund the highest per-pupil education spending for below-average educational outcomes.
The House has also increased the fees on your investment or retirement accounts and will tax the communications infrastructure that you use.
While some might cheer for making corporations pay more in taxes by creating the highest corporate tax rate in the country and becoming an outlier by including FDII and GILTI income, this is just a reminder that consumers eventually end up paying that.
It’s not as if this is a new response, As one member of the Ways and Means Committee, Rep. Scott Beck, pointed out;
“In the last 10 years, personal income tax receipts in the state of Vermont have grown 54%, sales tax receipts have grown 65%, and property taxes have increased by 53%. Corporate income tax has nearly tripled in the last 10 years.”
Revenue to the State has been increasing but spending has been on a runaway train and when the Legislature has been forced with hard decisions, they’ve just looked to Vermonters to pay more, labeling anyone who pushes back as unwilling to pay their fair share.
The House passed its budget this week, and while the difference between the Governor’s proposed budget and the one the Democratic party-controlled Legislature might look close on dollar amounts, they are very far apart on content. Notably, the Governor did not propose all the taxes noted above.