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The 2026 legislative session was defined by big structural debates about education, land use, affordability, and Vermont’s long-term economic competitiveness. Lawmakers advanced major reforms in areas including education governance, tax conformity, data privacy, and economic development, while also relying on one-time funding to address mounting cost pressures.

Employers also faced proposals that would have increased taxes, expanded workplace mandates, and added new regulatory burdens. Many of those efforts were ultimately set aside, underscoring the continued importance of business engagement in the policymaking process.

Below is a snapshot of the major developments, decisions, and debates that employers should know about from the 2026 legislative session. 

✅ What Changed for Vermont Employers

💸 Property Tax Increases Temporarily Softened More than $100 million in one-time funds were used to hold average property tax increases to roughly 3.5%. The challenge now shifts to how those costs will be addressed in future years.

📈 State Spending Continues to Climb Vermont’s budget has grown by $3.5 billion over six years. While spending growth slowed this year, affordability remains a major concern for employers.

🔬 Research & Development Incentives Expanded Businesses investing in innovation will have access to significantly larger state R&D tax credits, strengthening Vermont’s competitiveness for growth and investment.

🏡 Second Home Tax Classification Approved A new tax classification for second homes was created while businesses and long-term rental housing remain grouped together under the new system.

🎓 Education Reform Took a Major Step Forward Lawmakers approved sweeping changes aimed at controlling long-term costs, modernizing governance, and improving educational outcomes.

📉 Pressure Added to School Spending Excess spending thresholds will gradually tighten, creating additional incentives to control education costs before broader reforms take effect.

🔧 Career & Technical Education Stays Front and Center CTE programs remain a key workforce priority, with new focus on student access, workforce alignment, and future governance discussions.

🏗️ Act 250 Barriers Rolled Back Several costly and restrictive Act 250 provisions were repealed, while key exemptions were extended through 2028 to keep housing and economic development projects moving.

🏘️ Housing Development Gets More Flexibility Communities will be required to allow additional housing options in more areas, helping remove barriers to new housing construction.

🏠 New Housing Construction Tools Created New financing programs and modular housing initiatives aim to increase housing production and improve affordability.

🏢 VEGI Is Here to Stay The sunset on Vermont’s primary job creation incentive program was removed, providing greater certainty for businesses considering expansion.

🌲 Rural Development Funding Expanded Additional funding and program improvements will help support business relocation and expansion projects across Vermont.

⚖️ Small Businesses Gain More Support Additional funding was approved for the Small Business   Center and Small Business Law Center, expanding access to expert guidance.

🏨 Hospitality Workforce Investments Continue A new apprenticeship pilot and hospitality education study aim to strengthen workforce pipelines for one of Vermont’s largest industries.

🔋 New C-PACE Financing Program Launches Businesses can now access long-term, low-cost financing for energy efficiency, renewable energy, and resilience projects.

🔒 Data Privacy Rules Reach the Finish Line Vermont adopted a new privacy framework that more closely aligns with neighboring states, creating a more workable compliance path for employers.

📡 Broadband Expansion Keeps Moving Streamlined permitting for telecommunications projects was extended, supporting continued broadband buildout throughout Vermont.

🍺 Brewers Gain New Flexibility Vermont brewers will have more options for self-distribution and product sales, creating new opportunities for growth and market access.

🪙 Cash Transactions Get Simpler Businesses may now round cash transactions to the nearest five cents, reducing the challenges associated with the declining use of pennies.

🚗 Road Funding Shifts for Electric Vehicles Beginning in 2027, electric vehicles will transition from a flat fee to a mileage-based system to help fund transportation infrastructure.

🛑 The Good and Bad of What Didn’t Make It Over the Finish Line

🚫 Major Income Tax Increases Rejected Proposals that would have increased taxes on investment income, business transitions, and pass-through entities did not advance.

🛑 New Employer Mandates Stalled Proposals affecting workplace temperature standards, flexible scheduling requirements, and non-compete agreements failed to advance.

🐀 Rodenticide Ban Stopped A proposed ban on rodenticides did not advance, preserving an important pest management tool for restaurants, food manufacturers, and other businesses responsible for maintaining safe facilities.

⚡ Major Energy Mandates Did Not Advance Proposals related to net metering and building energy requirements stalled, avoiding additional cost pressures on businesses and housing development.

🩺 Association Health Plan Expansion Stalled Efforts to expand affordable health coverage options for employers did not advance, leaving businesses with fewer tools to manage rising health care costs.

🌊 Wetland Reform Remains Unfinished No major changes were made to Vermont’s wetland permitting system, leaving ongoing concerns about project costs, timelines, and predictability.

♻️ Additional Plastics Restrictions Did Not Advance Legislation that could have imposed new restrictions on advanced recycling and manufacturing processes did not move forward.

💰 Businesses Avoided New Cost Pressures A number of proposals that would have increased costs for employers, from new workplace mandates to additional taxes and fees, ultimately failed to gain enough support to pass.

After two years of debate, negotiation, and advocacy, S.71, Vermont’s comprehensive data privacy legislation, officially passed the Legislature this week after the House approved the bill and the Senate concurred with House changes. The legislation now heads to Governor Phil Scott.

For Vermont businesses, the final version of S.71 reflects substantial movement from earlier proposals in the House that would have made Vermont a significant national outlier. While the legislation still creates new compliance obligations for businesses operating in the state, the final product more closely aligns with surrounding states and regional privacy frameworks, creating a more workable path forward for Vermont businesses and organizations navigating increasingly complex state privacy laws.

The Vermont Chamber was a chief advocate for Vermont’s business community throughout this process, consistently pushing for a balanced approach that protects consumer privacy while maintaining regional compatibility and avoiding provisions that would unnecessarily disadvantage Vermont businesses.

Significant credit is owed to Senator Thomas Chittenden for initially sponsoring legislation grounded in a more regionally compatible framework, as well as the members of the House Commerce and Economic Development Committee, who continued working toward a practical path forward even as national lobbying groups pushed for Vermont to adopt far more aggressive first in the nation standards.

Debate on the House Floor became unusually contentious after the bill’s reporter delivered remarks that many viewed as mischaracterizing the work of her own committee and the extensive negotiations during the committee process. The representative voted against the bill she was reporting before moving on to lobby senators to reject concurrence. For an institution that traditionally operates with a high level of decorum and professionalism, this situation stood out from the normal legislative process.

The Senate ultimately voted to concur with the House version, recognizing the inclusion of an 18-month implementation timeline that provides lawmakers additional opportunity to revisit the law if adjustments are needed before it takes effect.

Key Components of the Final Bill

The final version of S.71 includes:

• Consumer rights to access, correct, delete, and obtain copies of personal data held by businesses.
• Opt out rights for targeted advertising, sale of personal data, and certain automated profiling activities.
• New requirements around privacy notices, consumer consent for sensitive data, and data security practices.
• Protections for sensitive data categories include health information, biometric data, precise geolocation, and information related to minors.
• Applicability thresholds that limit the law to businesses processing significant amounts of consumer data rather than sweeping in every Vermont small business.
• Exemptions for many federally regulated entities and data are already governed under laws such as HIPAA and Gramm-Leach-Bliley.

The Vermont Chamber will continue working with policymakers, stakeholders, and our members during implementation to ensure the law is interpreted and applied in a way that protects consumers while maintaining Vermont’s economic competitiveness.

After weeks of negotiations, conference committees finalized agreements Thursday night on both H.955, the education transformation bill, and H.949, the annual yield bill. Both measures are expected to receive final votes in the House and Senate today and together represent the Legislature’s attempt to address both the immediate cost of Vermont’s education system and its long-term structure.

The two bills are interconnected. H.949 determines how Vermont funds education next year and what property tax rates taxpayers will face, while H.955 lays out the structural reforms lawmakers hope will slow future cost growth and stabilize the system over time.

This connection matters for Vermont businesses. Employers continue to raise concerns about affordability, workforce attraction, housing costs, and Vermont’s overall competitiveness. Education spending is one of the largest drivers of property taxes, which directly impacts businesses, employees, and the cost of living statewide.

H.949: The Yield Bill

The yield bill establishes the education property tax rates needed to fund Vermont’s education system for FY27, while also incorporating several policy changes intended to support the transition envisioned in H.955.

Key provisions include:

• $100 million property tax buy down
  Lawmakers used approximately $100 million in one-time funds to reduce the education property tax increase for FY27. That buy down lowered the statewide average property tax increase to approximately 3.5%, significantly below what many communities were originally projecting.
• FY27 property tax yields
  The agreement sets the property dollar equivalent yield at $9,401 and the income yield at $12,960. The nonhomestead tax rate was set at $1.643 per $100 of equalized property value.
• Excess spending penalty transition
  Rather than immediately imposing the full excess spending threshold, the conference committee created a phased transition between FY28 and FY32, gradually tightening the threshold over time.
• Property tax relief expansions
  The bill expands renter credits and circuit breaker style property tax relief programs for lower income Vermonters, increasing renter credits and raising income eligibility thresholds.
• Tuition growth limits
  Beginning in FY28, tuition increases paid to public and approved independent schools would be capped based on statewide education spending growth.
• Alignment with foundation formula transition
  The bill includes several technical and conforming changes tied directly to the future implementation of the foundation formula established under H.955.

While the lower average property tax increase will provide short term relief, the agreement relies heavily on one-time money to buy down costs for a second consecutive year. In many ways, lawmakers put part of the education funding challenge on a credit card that will eventually need to be reconciled in future years. This increases the pressure on policymakers to ensure the structural reforms contemplated in H.955 actually produce long-term cost containment.

H.955: Education Transformation Bill

The final conference committee agreement on H.955 moves Vermont further toward statewide education restructuring, while stopping short of mandatory school district mergers.

Key elements of the agreement include:

• Creation of merger committees statewide
  School districts across Vermont will be grouped into regional merger committees that are tasked with studying and recommending potential governance consolidation opportunities. The conference committee finalized 20 regional groupings covering districts throughout the state.
• Continued movement toward regionalization
  While mergers are not directly mandated, districts are expected to participate in a formal review and planning process that is intended to encourage larger, more regionally coordinated governance structures.
• Foundation formula transition
  The bill continues Vermont’s transition toward a foundation funding formula, which would significantly change how education funding is distributed beginning later this decade. Several timelines in the bill were accelerated during negotiations.
• Limits on tuition and supplemental spending
  The agreement includes guardrails intended to control future spending growth, including restrictions on schools charging tuition above public tuition amounts and limits on supplemental district spending above educational opportunity payments.
• Legacy debt aid
  The bill creates a new legacy debt aid structure that would provide districts with 75 percent aid on eligible school construction debt approved before the end of 2024, though eligibility is tied to participation in the merger process.
• Class size and operational standards
  The conference committee also refined definitions and implementation timelines around class size standards and district quality requirements.

Why These Bills Matter Together

Together these bills reflect the Legislature’s acknowledgment that Vermont’s education finance system faces both immediate affordability pressures and long-term structural challenges.

H.949 attempts to manage next year’s property tax impacts while H.955 seeks to create a framework for longer term cost containment and governance reform. Whether these reforms produce meaningful cost stabilization remains an open question, but the conference committee agreements signal that lawmakers are attempting to connect short term tax policy with longer term structural change.

For employers, the stakes are significant. Property taxes impact commercial taxpayers directly while also influencing housing affordability, workforce retention, and Vermont’s broader economic competitiveness. Businesses have consistently identified affordability as one of the largest barriers to growth, and these bills will likely shape that conversation for years to come.

Both bills now head to the House and Senate floors for final action today.