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Senate Finance hears fiscal risks of linking to federal HR 1; R&D expensing flagged as main near‑term cost
Summary
Fiscal staff told the Senate Finance Committee that fully conforming Vermont tax law to federal HR 1 — particularly allowing full expensing for research and experimental (R&D) costs — would front‑load losses and could reduce FY26 revenue by about $21.3 million; the bill blends selective conformity for small businesses with decoupling for larger firms to reduce near‑term impact.
The Senate Finance Committee heard a detailed fiscal presentation on the miscellaneous tax bill and how federal changes in HR 1 would flow through to Vermont tax revenues.
Fiscal office staff explained that many federal personal‑income changes are "below the line" on federal forms and therefore do not pass through to Vermont returns, but several corporate provisions do. The presenter said that the research and experimental deduction (R&D) provisions were the largest near‑term cost driver: "this negative $21,000,000 that you see there was not accounted for in the budget," the fiscal office analyst told the panel, describing updated estimates prepared with the Department of Taxes.
Why it matters: the committee was…
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