Lawmakers weigh property-tax deferral as a way to soften shift to a homestead exemption

Tax department staff and lawmakers discussed whether a property-tax deferral program could reduce increases for homeowners who would pay more under a proposed shift from Vermont’s income-based property tax credit to a homestead exemption.

Jake Baldwin, a Department of Taxes official, told members of the House Ways and Means and Senate Finance committees on Feb. 11 that "deferral programs are offered in 31 other states and also Washington, D.C.," and reviewed how other states limit eligibility, apply interest, and place liens on properties.

The discussion arose in the context of a department proposal to replace the current income-based education property tax credit with a tiered homestead exemption tied to household income. Baldwin said the proposed exemption is intended to improve transparency, make education property taxes more progressive by property wealth, and make relief sensitive to changes in the coming tax year rather than lag a year as the current credit does.

Lawmakers focused on how deferral…