Senate committee backs full military-retirement income tax exemption in H.34, sends bill to finance

The Senate Economic Development, Housing & General Affairs Committee agreed to advance H.34 with an amendment that would fully exempt U.S. military retirement pay and survivor benefits from Vermont income tax.

Committee members said the change is intended as a workforce recruitment tool to encourage military retirees to move to Vermont. Senator Randy Brock, who led the discussion, argued the full exemption "matches what our surrounding states do" and said the provision is part of a broader economic development strategy to attract skilled workers who already possess needed job skills.

The bill as amended would change Vermont's retirement-income tax treatment by adding an exclusion for U.S. military retirement pay and survivor benefits to 32 V.S.A. —711 (statutory citation as discussed in committee). Kirby Dean, legislative counsel, described the amendment as "a full exclusion of all U.S. military retirement income and income received by beneficiaries for survivor benefits," and said the draft before the committee implements that exclusion.

Members reviewed a separate House proposal, S.51, which…