Ways & Means reviews HR 1 conformity: staff flags short‑term revenue risks, preserves relief for small businesses

The Ways & Means Committee convened May 5 and spent its meeting examining a miscellaneous tax bill that largely links Vermont law to federal tax changes in HR 1, with staff presenting a fiscal note and policy options.

Patrick Kirchner of the Joint Fiscal Office walked members through how federal changes “flow through” to Vermont, explaining that items that are ‘‘above the line’’ on federal returns generally affect state taxable income while ‘‘below the line’’ adjustments often do not. He said full conformity to HR 1 would have created what the office initially estimated as a roughly $21,000,000 hole for fiscal year 2026 and an estimated $33,000,000 gap for fiscal year 2027 under normal conformity assumptions, which motivated the committee’s targeted response.

Why it matters: the committee’s approach is intended to limit near‑term budget risk while honoring certain federal policy changes. Kirchner described a bifurcated solution: Vermont generally will conform to federal treatment for firms meeting the federal small‑business test (average gross receipts over three years not…