Senate Finance reviews Vermont income-tax structure, distribution and a proposed surtax to fund schools

Patrick Jitson, an analyst at the Joint Fiscal Office, briefed the Vermont Senate Finance Committee on the structure of the state personal income tax, the distribution of who pays it and recent statutory changes, and described the revenue effect of a proposed surtax on very high earners.

Jitson said the state starts with federal adjusted gross income (AGI) and then makes state-specific additions and subtractions — for example, adding bonus depreciation and certain interest while subtracting the state standard deduction and exemptions — to reach Vermont taxable income. "I really appreciate the enthusiasm to learn about income taxes," Jitson told the committee as he began the presentation.

The briefing laid out why brackets, deductions and credits matter. Vermont uses graduated tax brackets (the top marginal rate cited in the briefing is 8.75%), then applies nonrefundable and refundable credits. Jitson explained the difference: nonrefundable credits can reduce a filer’s tax liability to zero but do not produce a payment from the state, while refundable credits can result in a refund if the credit exceeds tax owed. He noted the earned-income tax credit (EITC) has been increased in recent years (described in…