Ways & Means hears Legislative Council briefing on personal and corporate income tax, federal 'link‑up' and impending federal expirations

Kirby Keaton of the Office of Legislative Council told the House Ways & Means Committee on Jan. 15 that Vermont’s personal and corporate income taxes begin by referencing federal law, then apply state-level adjustments.

Keaton said the starting point for Vermont’s personal income tax is the federal definition of taxable income and pointed committee members to the controlling state provision, 32 V.S.A. § 5811(21). “The tax base for the personal income tax in Vermont are based off of what's called taxable income. That definition is located at 32 VSA section 5811 subdivision 21,” Keaton said.

The presentation explained the annual “federal link‑up,” the statutory cross‑reference that incorporates federal income tax law as of a specified date into Vermont law. Keaton said the link‑up is updated annually (the date in statute is changed each year) and emphasized practical constraints including Vermont’s prohibition on retroactive effective dates under 1 V.S.A. § 214. “When you pay your income taxes in 2025 this year in the spring, you're paying them for 2024,” Keaton said to illustrate timing.

Why it matters: Vermont starts from federal adjusted gross income…