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Committee clears technical fix to preserve Vermont's 40% capital-gains exclusion for qualified small-business stock
Summary
Legislative counsel explained and the Ways & Means Committee signaled support in a straw poll for amendments to H933 that remove language preventing Vermont's existing 40% capital-gains exclusion from applying to qualified small-business stock; staff said the change reduces estimated revenue by about $300,000 over the near term.
Legislative counsel Kirby told the House Ways & Means Committee the first two amendments to H933 would strike proposed language that prevented Vermont's existing 40% capital-gains exclusion from applying to gains on qualified small-business stock, restoring the exclusion for affected taxpayers.
"This amendment would strike out that underlying language," Kirby said, explaining the change was intended to treat these gains "like any other capital gains" after members raised concerns they had not fully considered the earlier text. Kirby also described a third, separate amendment that clarifies effective dates so the statute cannot be interpreted as coupling to a federal law that did not yet exist.
Pat, a staff member responsible for fiscal estimates, told the committee the correction reduces the revenue gain from the original decoupling estimate by roughly $300,000 across the near-term fiscal window. "That lowered the estimate that you saw last time by about 10%," Pat said.
Committee members said they appreciated the technical cleanup. After discussion, the committee held a show-of-hands straw poll that signaled committee support for the technical corrections; the session did not record a final floor motion in this hearing.
Why it matters: The change affects how Vermont applies its 40% capital-gains exclusion to a narrow federal provision for qualified small-business stock. The fiscal effect in the committee's analysis is modest relative to the overall budget but was explicitly noted by staff.
What comes next: The committee reported the amendment for floor consideration; further action will depend on floor debate and subsequent legislative steps.
