Wealth tax clears house but not Senate
2024 saw several new or amended taxes pass both Houses in the Vermont Legislature. At least three others passed one chamber but not the other. Information republished verbatim from State House Insider, the newsletter of Leonine Public Affairs.
Taxes that passed both House and Senate
- Property tax – A 13.8 percent increase in the average homestead and non-homestead property tax bill compared to the prior year.
- Cloud Tax – A tax on prewritten software accessed remotely estimated to raise $14.7 million for the education fund to buy down property tax rates.
- Short-term rental tax – A three percent surcharge on short-term rentals estimated to raise $11.8 million for the education fund to buy down property tax rates.
- Property Transfer Tax – An increase in the property transfer tax rate on year-round secondary residences without a landlord certificate from 1.25 percent to 3.4 percent and increased exemptions that lower the tax for property used as a principal residence. This is estimated to generate $15.7 million. The revenues are directed towards housing initiatives.
- Securities Fees – Increases to fees on issuers of securities and investment companies, estimated to generate $19.4 million annually mainly directed to the general fund.
- Universal Service Fund (USF) – Repeal of the 2.4% Universal Service Charge for landline, postpaid wireless, and interconnected VoIP consumers and replaces it with a $0.72 monthly charge per access line. The change is expected to raise $7.96 million in total, $3.01 million in new additional annual revenue. USF is used to support E911, the 988 suicide crisis and lifeline and other programs.
Taxes that passed one chamber only
- Corporate tax – The House passed a bill to increase the corporate income tax top marginal tax rate from 8.5 percent to 10 percent of corporate net income attributable to Vermont, estimated to generate $17.7 million annually. The bill also proposed to add back some federal deductions (GILTI and FDII) that would increase reported net income to Vermont for those corporations with those types of income, estimated to raise approximately $15.3 million annually. The funding was to be used to expand Medicaid and invest in the judiciary.
- Personal Income Tax (“the Wealth Tax”) – The House passed a bill to add a new top marginal income tax bracket for tax filers at a rate of 11.75 percent on Vermont taxable income above $410,650 for single filers and $500,000 for married filing jointly filers, for example. This would increase personal income tax revenue by $74.9 million annually. The revenue was to be used for housing initiatives.
- Streaming tax – The Senate passed a bill to tax streaming services at 5 percent of a streaming provider’s gross revenues derived from video streaming services in Vermont. The streaming tax was estimated to raise $6 to $7.6 million in general fund revenue, a portion of which went to the Secretary of State to administer a grant program to fund the operational costs of the 24 Access Management Organizations (AMOs) in Vermont.