Tax department, business and policy groups urge simpler homestead exemption to replace complex property tax credit

The House Ways & Means Committee spent its afternoon on proposals to simplify Vermont's property tax relief system and to shift the education portion of property tax relief from the current credit to a tiered homestead exemption, a tax department official said.

Jake Feldman, of the Vermont Department of Taxes, told the committee the administration's proposal would "transition the education portion of the credit system to be reconfigured as a homestead exemption that's tiered based on income," and he said the plan is intended to start in fiscal 2028 with normal credit processing continuing through FY26 and FY27.

The change matters because, Feldman said, the current credit is "hyper complicated" and produces myths, misinformation and tax surprises for homeowners and school boards. He said the proposed exemption would be applied to house-site value only (not the entire homestead), would mirror familiar household income cutoffs to limit abrupt changes, and would shift benefits from higher-value properties toward lower-value properties.

Why it matters: Witnesses said the existing system creates large year-to-year bill jumps for many moderate-income Vermonters and can discourage home turnover, which contributes to housing shortages. Business and policy groups urged pairing any exemption with targeted mitigation for households that would see tax increases.

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