Ways & Means reviews bill to decouple Vermont tax code from federal changes, expand R&D and downtown credits

The Ways & Means panel discussed draft legislation on Feb. 25 that would decouple several Vermont tax provisions from recent federal changes and reshape a set of state credits and administrative rules.

Speaker 3, the presenter for the draft, told the committee the bill moves and clarifies existing language so Vermont’s tax administration will ‘‘treat property as if regular depreciation were used’’ rather than allowing the federal ‘‘bonus depreciation’’ treatment to reduce state taxable income. ‘‘What this is doing is it’s saying, we’re not gonna allow the bonus depreciation,’’ Speaker 3 said, explaining the draft also includes rules for sold or disposed property so taxpayers cannot deduct more than intended.

The draft would decouple Vermont from two bonus-depreciation provisions that were affected by the recent federal bill (HR 1), and add a decoupling from bonus depreciation for qualified production property, which covers certain machinery and production facilities. Speaker 3 said those changes are being moved and clarified in statute to reduce administrative interpretation burdens.

Committee…