Strength in Service: Unlocking Opportunity with Military Pension Benefits
This Op-Ed is by Amy Spear, President of the Vermont Chamber of Commerce
Vermont stands at a pivotal moment in its economic and demographic evolution. As our state grapples with an aging population and an increasing need for a vibrant, skilled workforce, we must leverage every opportunity to build a stronger future. Military retirees represent one such opportunity—a group renowned not only for their exceptional skills and discipline, but also for their potential to invigorate local communities.
Historically, Vermont has been an outlier among states when it comes to taxing military pensions. While many neighboring states offer full exemptions, Vermont currently exempts only the first $10,000 of military retirement pay for residents whose incomes fall below modest thresholds. This limited exemption contradicts our goal of creating a welcoming environment. Compared to states like New Hampshire and Maine—both ranked among the top 10 for military retiree benefits—Vermont remains the worst state for our veterans, sending a discouraging message to those who have served our nation.
Data shows that military retirees are not only experienced professionals but also bring steady incomes and an unwavering commitment to community service. In fact, 70% of these individuals are between the ages of 35 and 50, often continuing to contribute to the workforce in civilian roles well after their military service ends. Their ongoing economic activity strengthens local economies and expands the tax base—benefits that far outweigh the estimated $4 million in foregone revenue from a full exemption.
The demographic stakes are high. Vermont’s veteran population is declining at a rate of 2.7% annually, compared to a national decrease of 1.6%. This trend is most pronounced among those aged 40 to 64, the very group poised to benefit from and contribute to a more inclusive pension exemption policy. By aligning our tax policies with those of our peers, we not only honor the service of military retirees but also position Vermont as a destination for a skilled, diverse, and dynamic workforce.
This policy change is a key element of the Vermont Economic Action Plan, which focuses on two main pillars: Expansion—growing our population and housing—and Efficiency—regulatory streamlining and fiscal responsibility. Integrating a full state income tax exemption for military retirees and their survivors into this framework will strengthen our communities, enhance our workforce, and advance the Vermont economy.
The Vermont Chamber of Commerce remains steadfast in its support for removing state taxation on military retirement pay and survivors benefits. Creating a tax environment that respects and rewards service will not only attract military retirees but also contribute to a broader, more resilient economic landscape in Vermont.
Call to Action
As state lawmakers from across the political spectrum show growing support for this measure, we encourage all Vermonters to recognize the benefits of welcoming our military retirees. More people need Vermont, and Vermont needs more people—especially those who have served our country with honor and distinction.
Now is the time to act. We encourage Vermonters to reach out to their legislators—by calling, emailing, or meeting with them—and ask for S.17 and H.43 to be enacted this legislative session. Every voice matters in shaping a future where Vermont honors and supports those who have served our nation.
