Commissioner Bolio: Comprehensive & Progressive Tax Relief for Vermonters
The following remarks were delivered by Department of Taxes Commissioner Craig Bolio at a February 2, 2022 bipartisan press conference to support eliminating the state income tax on military retirement pay.
Commissioner Bolio: I want to talk today about the comprehensive progressive $51.5 million tax relief package the Governor has proposed which impacts Vermont families, including military families, young workers, and retirees.
Exempting military retirement pay and survivor benefit income from state income tax is a key piece of the tax relief package.
Currently, Vermont is one of only three states that fully tax military pensions, meaning 47 states offer at least some exemption for military pension income, and many offer a full exemption or simply don’t have state income taxes at all.
Vermont is behind on the 8-ball on this.
Military retirees contribute to their communities and add to the economy of Vermont by bringing life-long incomes and healthcare, and eligibility for other veteran’s benefits such as the GI bill, small business loans, VA home loans, and more.
In an issue brief published by the Joint Fiscal Office last February, it was noted national data shows that 70% of military retirees retire between the ages of 35 and 50, which means most of these retirees, can join our civilian workforce and bring skills and experience to help with our workforce shortage.
And data from the Department of Defense shows that between 2016 and 2019, Vermont’s population of military retirees was essentially stagnant.
So, let’s join the 47 other states that don’t fully tax this income, and encourage more military retirees to stay here and come here.
I also want to highlight other elements of the Governor’s tax relief package that will benefit many Vermont families, including military families.
He’s proposed a dramatic expansion of Vermont’s Child and Dependent Care tax credit to help middle income families afford childcare.
He’s proposed expanding Vermont’s earned income tax credit to match the most generous fully refundable credit in the nation.
The package also includes a proposal to allow more military and civilian retirees alike to exclude their social security payments from state income taxes.
And the Governor is proposing strategic, targeted income tax credits to help address some of our most urgent workforce needs in nursing and childcare, as well as allowing all Vermonters to deduct all of their student loan interest paid on their taxes.
This is a good tax relief package. It is meaningful, it is progressive, and it will help provide relief to Vermonters through several different stages in their lives from being young workers, to being middle-income families, and ultimately being Vermont retirees.
We ask that the Legislature take the time to consider the Governor’s tax relief package thoughtfully, and we thank the National Guard and Veteran’s Affairs caucus for their interest in these proposals.