Taxes Archives - Vermont Chamber of Commerce

Senate Committee Weighs Labor Bill Provisions with Significant Business Impacts

February 21, 2025

Senate Committee Weighs Labor Bill Provisions with Significant Business Impacts

The Senate Economic Development, Housing, and General Affairs Committee is evaluating proposals put forward for potential inclusion in an omnibus labor bill that could introduce substantial changes to Vermont’s employment laws. The proposals range from minor technical adjustments to major shifts that may increase labor costs and regulatory obligations for employers. The Vermont Chamber is analyzing the provisions to assess their potential impact on businesses and economic growth. Some key provisions under consideration include:

Minimum Wage Increase – Raising the minimum wage to $18.60 per hour by January 1, 2026. This increase may lead to higher consumer prices, compressed wage differentials, and hiring challenges.
Overtime Expansion – Extending overtime eligibility to certain lower-salaried executive, administrative, and professional employees could increase payroll costs and limit scheduling flexibility.
Vacation Leave Payout – Requiring employers to compensate any departing employees for unused vacation leave may create cash flow challenges, especially for businesses with staff who accrue significant leave balances.
Workers’ Compensation Changes – Including health insurance in the definition of wages for workers’ compensation could result in higher insurance premiums for employers.
Prevailing Wage & Payroll Record Requirements – Amending prevailing wage standards for state construction projects would raise wage and benefit costs while mandating additional payroll recordkeeping and enforcement measures. These changes may disproportionately affect small contractors and subcontractors and raise concerns for migrant workers.
Employer Mandates & Workplace Standards – Establishing a “good cause” standard for termination may limit employer flexibility in managing their workforce and increase legal risks. Restricting noncompete agreements could make it harder for businesses to protect proprietary information and maintain workforce stability. Additionally, requiring that employers provide accommodations to sit in the workplace could necessitate new workplace modifications.

These provisions, if enacted collectively, could create significant compliance burdens, increase operational costs, and reduce employer flexibility. With rising costs, higher taxes, and significant labor law changes enacted in the last legislative biennium, lawmakers must consider the cumulative impact of these financial and regulatory pressures on Vermont businesses. The Vermont Chamber will continue advocating for modifications to mitigate unintended consequences for Vermont businesses and is actively engaging with policymakers to ensure that any changes to labor laws support economic growth while balancing employee protections.

February 21, 2025

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Draft Bill Unveils Bold New Blueprint for Vermont’s Education Finance System

February 21, 2025

Draft Bill Unveils Bold New Blueprint for Vermont’s Education Finance System

Taking a step forward in efforts to modernize Vermont’s education funding, the House and Ways and Means Committee has begun reviewing newly released draft bill language outlining a comprehensive overhaul of the state’s property tax framework, based on the Administration’s proposal.

Redefining the Tax Landscape
At the heart of the proposal is a statewide education tax that applies uniformly to both homestead and non-homestead properties. Unlike the current system—which relies on a fixed base rate for non-homestead properties—the new approach ties the tax rate to an annually adjusted per-pupil “base amount” of $13,079. This shift is designed to account for forecasted revenues and ensure that education spending keeps pace with the evolving fiscal environment. Under the revised framework, the Commissioner of Taxes will calculate the appropriate rate for each municipality, and property tax bills will provide a detailed breakdown of the calculations, reinforcing a commitment to transparency.

A Closer Look at School District Funding and the State Guarantee
The draft bill introduces a “State Guarantee” mechanism intended to level the funding playing field among school districts. By comparing each district’s taxable property wealth per student to the state median, districts with lower local resources stand to receive substantial state support. The guarantee is calculated by applying a specific “State Guarantee Rate”—defined as one minus the ratio of a district’s equalized property tax grand list per-pupil to that of the median district—to the district’s approved spending. This targeted measure is designed not only to bolster districts that traditionally face fiscal challenges, but also to maintain local decision-making power in setting school budgets.

Ensuring Equity and Relief for Homeowners and Renters
The proposal further refines property tax relief by replacing the existing income-based property tax credit with a more progressive homestead exemption system. The new structure is tiered by income, promising greater relief for low- and moderate-income households. Additionally, for those with high property values relative to income, the draft includes provisions for a property tax deferral program—a model inspired by similar initiatives in states like Maine, Minnesota, and Oregon—allowing eligible homeowners to postpone a portion of their tax burden until a change in ownership occurs.

Safeguarding the Education Fund and Streamlining Administration
Revenue generated by the statewide education tax will flow into an Education Fund dedicated to covering the per-pupil base amount and the state guarantee. To ensure fiscal prudence, statutory reserve levels will be maintained at five percent, and strict administrative protocols will be enforced. Municipalities, in coordination with the Commissioner of Taxes, will play a critical role in billing, collecting, and remitting funds, all while adhering to robust penalties for any fraudulent claims.

Looking Ahead
As discussions continue, the Vermont Chamber will remain engaged in the conversation, ensuring that the impact on commercial and industrial properties is carefully balanced with the broader goals of funding a high-quality education system.

February 21, 2025

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Legislators Advance Housing Solutions to Support Economic Growth

February 14, 2025February 14, 2025

Legislators Consider Housing Solutions to Support Economic Growth

This week, legislators continued to explore approaches to address Vermont’s housing needs while bolstering economic growth statewide. During a Senate Economic Development, Housing and General Affairs Committee session, industry experts examined offsite construction for modular housing. The hearing detailed offsite building techniques, highlighting both cost efficiencies and operational challenges, while state officials stressed the importance of land factors and ongoing housing operations. The testimony concluded by outlining potential solutions and policy reforms needed to support sustainable housing development.

Parallel discussions centered on modernizing Vermont’s housing stock and infrastructure, with the Vermont Housing Improvement Program (VHIP) at the forefront. VHIP has successfully funded the rehabilitation of more than 1,000 housing units through a combination of grants and loans. Despite challenges such as fluctuating fair market rents and high costs associated with accessory dwelling unit projects, lawmakers remain committed to refining strategies that support a robust and accessible housing market for Vermonters.

The House Commerce and Economic Development and House General and Housing Committees are evaluating proposals to modernize community development financing. Two initiatives—the Housing Infrastructure Initiative (HIT), championed by Let’s Build Homes, and the Administration’s Strategic Projects for Advancing Rural Communities (SPARC) proposal—were discussed as potential new development financing tools that compliment Vermont’s traditional financing model of Tax Increment Financing (TIF). Both proposals offer streamlined structures and enhanced technical assistance for local municipalities, aiming to better support community needs. While concerns were expressed regarding rural feasibility and impacts on local resources, proponents detailed comprehensive financing and technical assistance strategies to alleviate these challenges.

Housing committees do not appear to be taking up the Administration’s omnibus housing bill. Instead, they plan to incorporate select elements into new committee housing bills. Ensuring that any final legislation includes strategic funding, robust infrastructure support, and targeted regulatory relief is critical. As both House and Senate committees continue to refine omnibus housing bills, the Vermont Chamber will continue working with lawmakers to integrate these forward-thinking proposals that equip communities and developers with tools to address Vermont’s housing crisis.

February 14, 2025

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From Tax Credits to State Guarantees: Vermont’s Education Finance Overhaul

February 14, 2025February 14, 2025

From Tax Credits to State Guarantees: Vermont’s Education Finance Overhaul

With a clear focus on progressivity, transparency, and local control, the Administration’s proposals address nearly every facet of the current education finance framework—from the way property tax credits are calculated to new mechanisms that directly address disparities among school districts.

A Progressive Shift in Tax Relief
The Administration has proposed reconfiguring the education portion of Vermont’s income-based property tax credit. The proposal would replace the current credit with a homestead exemption tiered by income, effective July 1, 2027. This shift is designed to address the “lag” between prior year income figures and current year tax obligations, making it easier for voters and school boards to see how budget votes translate directly into tax bills. Preliminary modeling—based on projected 2024 household income and FY25 property values—suggests that while some households may face modest increases, a range of mitigation strategies exist, such as a revamped circuit breaker credit and a property tax deferral program. These issues were discussed in a joint hearing with the Senate Finance Committee and the House Ways & Means Committee.

Recognizing that some households—especially those with high property values relative to income—might see tax increases under the new homestead exemption system, there was a focused discussion on relief through property tax deferral. Drawing on models from other states, including Maine, Minnesota, and Oregon, the proposal would allow eligible homeowners to defer a portion of their property taxes until the property is sold or ownership changes. While specifics remain under discussion, key ideas include setting deferral limits in tandem with the new homestead exemption and ensuring the program is accessible to those most in need.

Bridging the Gap
The Administration’s sweeping proposal also introduces a “State Guarantee” mechanism aimed at leveling the playing field for school districts. The mechanism calculates a “match rate” by comparing each district’s taxable property wealth per student to the state median. Districts with lower property wealth, which would traditionally struggle to fund education beyond the foundation formula, stand to receive significant state support. Meanwhile, districts with higher local resources would see little to no state guarantee. This targeted approach is intended to ensure more equitable funding while preserving local decision-making.

State Guarantee in Focus
The House Ways and Means Committee reviewed initial bill language that embeds the State Guarantee within a broader statutory reform of Vermont’s education finance system. This version provides precise definitions and detailed formulas—including adjustments to tax rates, billing procedures, and spending limits. Notably, it defines the “State Guarantee Rate” as one minus the ratio of a district’s equalized property tax grand list per pupil to that of the median district, with a floor at zero. This legislative framework also addresses related terms such as “excess spending” (spending above 118% of the statewide average) and specifies comprehensive administrative procedures to ensure accurate tax collection and fund remittance. While the legislative framework’s provisions are intended to create a more robust and enforceable education finance system, they also mean that local administrators, school districts, and taxpayers must navigate a more complex regulatory environment.

Balancing Change and Local Control
Looking ahead, education spending projections and district budgeting recommendations are aimed at improving resource allocation and operational efficiency. By aligning tax relief mechanisms with current income levels and streamlining district operations, the proposal aspires to create a more sustainable funding model while maintaining robust local control—a balance that has been at the center of Vermont’s education finance debates.

As legislators begin a careful review of these proposals, the Vermont Chamber remains committed to engaging in discussions and advocating for the Legislature to address the large-scale systemic issues crucial to reforming Vermont’s education system, ensuring both affordability and sustainability.

February 14, 2025

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The Vermont Economic Action Plan: Advocating for a Future of Abundance Rather than Scarcity

February 7, 2025

The Vermont Economic Action Plan: Advocating for a Future of Abundance Rather than Scarcity

This week, Vermont Futures Project Executive Director, Kevin Chu, testified before the House General and Housing Committee and the Senate Economic Development, Housing, and General Affairs Committee, presenting key insights from the Vermont Economic Action Plan. Testimony brought forth conversations about actionable steps to address the root cause of many challenges impacting Vermont businesses, focusing on a future of abundance rather than scarcity.

To advance Vermont’s economic future and improve affordability, Chu emphasized that Vermont must focus on increasing its population to 802,000 by 2035 through recruitment and retention of working-age people. Attracting new people such as remote workers, military retirees, and international professionals, will strengthen the workforce, support business success, and broaden the tax base. Additionally, Vermont should aim to increase the labor force participation rate to 70% by 2035 by aligning education with employer needs and reducing barriers to employment.

The ability to grow businesses in Vermont ties directly to housing availability and infrastructure. The plan sets a target of 350,000 non-seasonal homes by 2035 and calls for reduced development timelines alongside 40% reductions in regulatory costs. Legislators engaged with the presentation content and discussed the intersections of growth and migration with infrastructure and transportation improvements.

The Vermont Futures Project’s testimony reinforced the urgent need to solve problems, quantified the scale of action needed, and outlined incremental steps to improve affordability. The testimony demonstrates the critical need for policy to be informed by data. The Vermont Chamber will continue working with lawmakers to advance policies that support business growth, streamline regulations, and improve economic opportunities across the state.

Access the full Economic Action Report here.

February 7, 2025

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Education Finance Overhaul Takes Center Stage at the State House

February 7, 2025

Education Finance Overhaul Takes Center Stage at the State House

This week, legislators began a detailed review of Governor Scott’s proposed “Foundation Formula” for education finance, though actual bill language has yet to be seen. The foundation formula, which sets a base per-pupil amount of $13,200, adds weighted allocations for special education, English Language Learners, and career and technical education. While the plan aims to centralize services and encourage district efficiencies, legislators requested further clarification—particularly around local control and how these changes would roll out over time.

The Joint Fiscal Office also presented findings on moving from a property-tax-based education funding model to an income-tax-based system. The Vermont Chamber maintains that an income-based education tax would not address the root causes of rising education costs. Instead, it would impose greater volatility, administrative complexities, and potentially higher marginal rates on families and businesses already managing significant tax burdens.

As Vermont remains third in the nation for tax collections per capita, refining the existing property tax structure, paired with targeted relief mechanisms such as the property tax credit, is a more prudent and balanced approach to ensuring equitable funding while preserving housing affordability and economic vitality. The Chamber will continue to advocate for the Legislature to address the large-scale systemic issues crucial to reforming Vermont’s education system, ensuring both affordability and sustainability.

February 7, 2025

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Senator Welch Hears From Vermont Chamber and Members on Potential Tariffs

January 31, 2025January 31, 2025

Senator Welch Hears From Vermont Chamber and Members on Potential Tariffs

The Vermont Chamber of Commerce, committed to advancing Vermont’s economy and representing businesses statewide, participated in a critical roundtable led by Senator Peter Welch to address the potential economic impact of proposed new tariffs. Vermont businesses, including manufacturers, farmers, and service providers, depend heavily on a strong trade relationship with Canada—Vermont’s largest trading partner. The Chamber views the maintenance of open markets and consistent trade policies as essential for economic stability and growth.

Potential tariffs, which could raise costs by 25% on raw materials, construction components, grain, and manufacturing inputs, pose significant risks to Vermont’s small businesses. The Vermont Chamber emphasized how such tariffs could lead to higher costs for essential goods and services, affecting businesses across sectors like agriculture, construction, and manufacturing. Without the capacity to absorb increased expenses, many businesses would be forced to pass these costs on to consumers, exacerbating the state’s affordability challenges and affecting the financial well-being of Vermont families.

As the Vermont Chamber continues its advocacy efforts, it remains focused on promoting policies that maintain economic growth while protecting Vermont businesses from financial instability. Working closely with state and federal leaders, the Vermont Chamber will strive to ensure that Vermont’s economic ecosystem remains resilient, with an emphasis on preventing harmful impacts from sudden cost increases and supporting long-term investment in workforce and community development.

January 31, 2025

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Governor Scott’s Budget: Fixing Systems, Not Just Funding Them

January 31, 2025

Governor Scott’s Budget: Fixing Systems, Not Just Funding Them

Governor Phil Scott delivered his budget address on Tuesday, presenting a $9 billion spending plan focused on education reform, housing expansion, and public safety—without increasing taxes or fees. Emphasizing the need for long-term structural fixes rather than temporary funding patches, the Governor underscored the importance of making Vermont more affordable and competitive for businesses and working families. His priorities align closely with the Vermont Chamber’s legislative agenda, which advocates for affordability, workforce development, and strategic economic growth.

Fixing Education

With Vermont spending $2.4 billion annually on education while student outcomes remain inconsistent, the Governor proposed a major overhaul. His plan includes consolidating school administration into five regional districts to improve efficiency, standardizing student funding and teacher salaries, and expanding career training programs to better prepare students for the workforce. To prevent a projected 6% property tax increase, he proposed using $77 million from the General Fund—aligning with the Chamber’s focus on fiscal responsibility and affordability.

Building Housing That Supports Workforce Growth

Vermont needs at least 7,000 additional housing units to meet demand, support employers, and sustain economic growth. The budget fully funds the Vermont Housing and Conservation Board with $37 million and provides $4 million for the Vermont Housing Improvement Program to help small-scale landlords bring units to market faster. Additionally, a one-time $40 million investment in water, sewer, and stormwater infrastructure will unlock stalled housing projects. These measures support the Chamber’s call for workforce housing solutions that directly address Vermont’s labor shortage.

Strengthening Public Safety for Businesses

Rising crime rates, including a 40% increase in aggravated assaults and a doubling of retail theft since 2018, have significantly impacted downtown businesses. The budget proposes tougher sentencing for repeat offenders, increased funding for pre-trial supervision, and expanded addiction recovery services. These steps align with the Chamber’s advocacy for policies that create safe, vibrant economic hubs for businesses and communities.

Investing in Infrastructure & Economic Resilience

The budget allocates $858 million for roads, bridges, and public transit, expands Downtown and Village Center Tax Credits by $2 million, and creates a new disaster recovery fund to provide immediate relief for businesses impacted by natural disasters. With a $15 million investment in Efficiency Vermont, the state aims to support climate resilience without raising costs for ratepayers—an approach that dovetails with the Chamber’s focus on sustainable economic growth.

A Shared Vision for Vermont’s Economic Future

Governor Scott’s message was clear: Vermont must fix broken systems, not just fund them. His budget priorities reflect many of the Vermont Chamber’s legislative goals—fiscal responsibility, workforce development, housing expansion, and public safety improvements. As the legislative session unfolds, the Chamber will continue working to ensure that policies promote long-term economic stability, business competitiveness, and a high quality of life for all Vermonters.

A complete transcript of the Governor’s budget address can be found here.

January 31, 2025

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Revenue Forecast: Vermont’s Resilient Economy and Emerging Challenges

January 24, 2025January 24, 2025

Revenue Forecast: Vermont’s Resilient Economy and Emerging Challenges

The Emergency Board met this week to review the Consensus Economic Forecast, which showcased Vermont’s strong but shifting economic landscape. Productivity remains high, supported by record-breaking stock market performance and 48 consecutive months of job growth. Workforce mobility continues to shape the labor market, with approximately 10,000 workers moving into and out of the state annually. While this activity brings opportunities, it also presents challenges for labor market stability.

State revenues are slightly above expectations, with Fiscal Year 2025 estimates showing overall collections 3.7% higher than projected. However, performance varies across major funding streams:

General Fund: Revenues exceeded expectations by 6.0%, driven by strong personal income and corporate tax collections.
Education Fund: A 2.1% shortfall stems from weaker sales and use taxes, meals and rooms taxes, and declining lottery revenues.
Transportation Fund: Revenues were 2.7% above estimates, bolstered by strong vehicle purchase activity.

Certain tax streams produced mixed results. The Childcare Payroll Tax fell behind expectations, while the Property Transfer Tax exceeded projections. Revenue from cigarette and e-cigarette sales declined but was partially offset by growth in nicotine pouches.

Adjustments to Vermont’s tax system also revealed uneven outcomes:

Sales & Use Tax: Expanding the tax to include sectors like cloud-based services underperformed expectations.
Short-Term Rental Surcharge: Marginally below projections.
Motor Vehicle Purchase & Use Tax: Surpassed targets due to pent-up demand and tariff concerns.

National trends add further complexity. A reliance on federal stimulus funds has temporarily supported Vermont’s economy, but as those funds taper off, pressure mounts for sustainable fiscal solutions. Additionally, uncertainty surrounding potential inflation, interest rates, and tax reforms under the incoming federal administration could impact the state’s economic trajectory.

The ongoing legislative session provides a critical opportunity to adjust fiscal priorities and prepare for these challenges. Vermont businesses should stay engaged in policy discussions to ensure their voices are heard. The next revenue update, scheduled for July, will offer further insight into the state’s fiscal outlook.

This forecast highlights both opportunities and uncertainties for Vermont’s business community, reinforcing the importance of adaptability and collaboration in navigating the state’s economic future.

January 24, 2025

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Vermont Chamber Advocates for Economic Growth and Housing Solutions

January 17, 2025January 17, 2025

Vermont Chamber Advocates for Economic Growth and Housing Solutions

The Vermont Chamber advocacy team engaged with both House and Senate committees to outline priorities aimed at fortifying Vermont’s economy. Discussions centered on housing affordability, workforce challenges, regulatory reforms, technology, and positioning Vermont as a premier relocation destination.

Tourism and manufacturing were highlighted as economic pillars, each contributing $3 billion annually and employing thousands of Vermonters. The Chamber’s Foundation, the Vermont Futures Project, was spotlighted for its focus on long-term economic planning, ensuring these critical sectors continue to drive statewide prosperity.

Housing availability and affordability took center stage as a pressing concern. The Chamber will continue advocating for meaningful reforms to reduce construction costs, improve infrastructure, and expand access, emphasizing the importance of addressing Vermont’s demographic challenges and workforce gaps to sustain economic vitality.

The Chamber emphasized the integral connection between business growth and wage growth, presenting data that reinforces the need for collaborative efforts to support businesses. Economic development remains a priority for the Vermont Chamber, and the team is poised to work alongside lawmakers to ensure businesses have the resources and environment necessary to thrive.

To bolster advocacy efforts surrounding technology issues, the Vermont Chamber introduced attorney Josh Diamond from Dinse, who the Chamber has hired on retainer. With his extensive legal expertise and six years of experience as Vermont’s Deputy Attorney General, Josh will provide critical insights and representation for Vermont’s business community on emerging technology challenges.

The team will do additional introductions next week and will dive into expert testimony on legislation. Through proactive collaboration with lawmakers, stakeholders, and industry leaders, the Vermont Chamber continues to champion policies that advance Vermont’s economy and enhance quality of life for all.

January 17, 2025

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