JFO modeling: changing Vermont property tax credit would shift $153 million and redistribute tax burden

Julia Richter, a fiscal analyst with the Joint Fiscal Office, told a legislative committee that Vermont’s homestead property tax credit was estimated to cost about $153 million in fiscal year 2025 and that proposals to change the credit’s income sensitivity would reallocate that money across taxpayers.

"We’re nonpartisan legislative office producing unbiased fiscal analysis," Richter said, explaining the office’s role and the limits of the briefing. She walked the committee through the mechanics of the credit, the modeling assumptions and three illustrative scenarios intended to show bounds of possible outcomes.

The nut of the briefing: the homestead property tax credit and the so‑called circuit breaker interact with education fund tax rates in an iterative, "self‑leveling" way. Richter said the office models the credit by estimating the credit earned in one year (the JFO cited FY2025 figures), then calculating how much education tax revenue must be raised the next year to offset that credit. Because changing the credit changes rates and rates change the credit, the estimates require repeated recalculation to converge on a final figure.

Richter described three modeling approaches the office ran as examples. In the first, she modeled a theoretical removal of income sensitivity entirely — effectively eliminating the credit for eligible filers and…