Committee reviews H.34 amendment to exempt U.S. military retirement, targeting recruitment of retirees for Vermont workforce

A proposed amendment to H.34 to fully exempt U.S. military retirement from Vermont taxable income and to direct annual reporting on military-targeted recruitment drew extended committee discussion on April 22.

Rick Segal of the Office of Legislative Council introduced the amendment’s intent and scope and deferred technical tax questions to legislative counsel Kirby Heating. Segal said the amendment folds language from SB 17 into H.34 and adds purpose language focused on recruiting military retirees and spouses into occupations with known shortages such as construction, healthcare and manufacturing.

Kirby Heating, legislative counsel, explained the tax change: under the amendment U.S. military retirement pay would be removed from Vermont taxable income, separate from existing partial exemptions that apply to certain retirement categories. Heating said current law allows a taxpayer to exclude up to $10,000 of military retirement from taxable income, subject to adjusted gross income thresholds (a phased exclusion around AGI $50,000–$60,000 for single filers, higher thresholds for joint filers). The amendment would eliminate the partial-exemption framework for military retirement and exclude that income fully; other partial exemptions (social security, federal civil service, and other contributory retirement systems) would remain unchanged, Heating said.

The proposed amendment also would add a reporting requirement for the Agency of Commerce…