Local Council examines new homestead exemption proposals to address property tax impacts

Vermont's Senate Finance Committee is considering significant changes to property tax exemptions aimed at providing relief to lower-income households. During a meeting on May 14, 2025, discussions centered around two proposed exemption structures, labeled Exemption C and Exemption D, which aim to adjust tax liabilities based on household income and property values.

Exemption C proposes a flat cap of $400,000 on house site values, which would cost approximately $1.6 million less than the current income sensitivity model for fiscal year 2025. This structure is designed to provide tax relief to households with lower incomes, while those with higher incomes may see increases in their tax bills. The committee noted that households earning between $65,000 and $90,000 with property values around $350,000 could face significant tax increases under this proposal.

In contrast, Exemption D introduces a more progressive approach, phasing out benefits for households earning above $100,000. This exemption would allow for a more gradual adjustment in tax liabilities, potentially offering greater relief to lower-income households. The estimated cost of this exemption is also around $1.6 million less than the current model, but it aims to balance the impact more equitably across different income levels.

Committee members expressed concerns about the potential for substantial tax increases for some households, particularly those on fixed incomes or with lower property values. The discussions highlighted the need for a careful evaluation of how these changes would affect various demographics, especially seniors and low-income families.

As the committee continues to refine these proposals, they are considering feedback from the public and recommendations from the tax department. The goal is to create a fairer tax system that alleviates the financial burden on those most in need while ensuring that the changes are sustainable and manageable for the state budget.

The committee plans to revisit these proposals in the coming weeks, with the hope of finalizing a recommendation that balances the needs of the community with fiscal responsibility.