Vermont Military and Veterans Benefits
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Summary of Vermont Military and Veterans Benefits: The State of Vermont offers special benefits for its military Service members and Veterans including property tax exemptions, state employment preferences, education and tuition assistance, vehicle tags, as well as hunting and fishing license privileges. Eligibility for some benefits may depend on residency, military component, and Veteran disability status.
State Benefit Highlights and Eligibility
What are my Vermont Military and Veterans State Tax Benefits?
Vermont Income Tax Exemptions for Military Pay: The following is a list of tax exemptions for resident military personnel in Vermont:
Military pay is exempt for full-time active duty with the Armed Services when the pay is earned outside of Vermont.
Up to $2,000 of military pay for unit training in Vermont for National Guard and U.S. Reserve personnel when the unit certifies the training was completed during the calendar year and the Service member's Federal adjusted gross income is less than $50,000.
Funds received through the federal Armed Forces educational loan repayment program under 10 U.S.C. chapters 109 and 1609, to the extent the funds are included in adjusted gross income of the taxpayer for the taxable year. ( 32 VSA §5823 )
Vermont Income Taxes on Retired Military pay: Military retirement pay is taxed according to federal guidelines.
Vermont Taxes on Military Disability Retired Pay: Military Disability Retirement Pay received as a pension, annuity or similar allowance for personal injury or sickness resulting from active service in the Armed Forces should not be included in taxable income if any of the following conditions apply:
You were entitled to receive a disability payment before September 25, 1975;
You were a member of the military (active or reserves) or were under a binding written commitment to become a member on September 24, 1975;
You receive disability payments for a combat-related injury. This is a personal injury or sickness that:
Resulted directly from armed conflict,
Took place while you were engaged in extra-hazardous service,
Took place under conditions simulating, including training exercises such as maneuvers, or
Was caused by an instrumentality of war.
You would be entitled to receive disability compensation from the Department of Veterans Affairs (VA) if you filed an application for it (the exclusion under this condition equals the amount you would be entitled to from the VA).
Vermont Taxes on U.S. Department of Veterans Affairs Disability Dependency and Indemnity Compensation: Dependency and Indemnity Compensation (DIC) is a tax-free monetary benefit paid to eligible survivors of military Servicemembers who died in the line of duty or eligible survivors of Veterans whose death resulted from a service-related injury or disease.
Vermont Taxes on Military Survivor Benefit Plan (SBP)/ Reserve Component Survivor Benefit Plan (RCSBP)/ Retired Serviceman’s Family Protection Plan (RSFPP) Military SBP/RCSBP/RSFPP: Survivor pensions are taxed following federal tax rules.
Vermont Military Personnel Eligible for Tax Filing Extensions for being Called to Active Duty: Individuals called up for full-time active military duty as the result of the existence of a military conflict in an area designated as a combat zone by the President of the United States, regardless of whether such duty is performed within the combat zone are authorized a 180 day extension after your period of service ends. If you are hospitalized, this also includes the period of continuous qualified hospitalization attributable to an injury received while servicing in such an area.
This extension may apply to the following benefits as long as the above guidelines apply:
Income Tax Extension: This benefit offers a 180-day extension to file income tax after service ends. Contact the town clerk in the town where your property is located for their instructions to claim this exemption.
Penalty and Interest Exemption for Property Tax: This benefit offers an extension of 180 days to file property tax without penalty, fee or interest. This must be voted on by the legislative body of your municipality. Contact the town clerk in the town where your property is located for their instructions to claim this exemption.
Homestead Declaration Abatement: if your homestead Declaration was late or incorrect due to military call up and you were outside Vermont for military service you may qualify for 180-day abatement. You may make an abatement request to your municipal treasurer. This must be voted on by the legislative body of your municipality. Contact the town clerk in the town where your property is located for their instructions to claim this exemption.
Combat Zone Property Tax Adjustment and Renter Rebate: During a military call up you may have a 180-day extension. For this benefit only, you must file a correct Homestead Declaration claim using Form HS-122 and include documentation of your service. Send the HS-122 Form and documentation to the Vermont Department of Taxes at the following address:
Taxpayer Services Division
Vermont Department of Taxes
P.O. Box 1645
Montpelier, VT 05601-1645
Vermont Property Tax Exemption for Disabled Veterans: The first $10,000 of appraisal value (up to $40,000 by a vote of the town for the municipal portion) of the established residence of a qualifying Veteran. Surviving Spouses of Veterans that previously received the exemption are also eligible.
The exemption only applies to homes that are owned by the Veteran or survivor. Veterans or survivors who rent their homes cannot pass this exemption to their landlord.
Who is eligible for the Vermont Property Tax Exemption for Disabled Veterans? A qualifying Veteran is defined as:
Veterans receiving disability compensation at a rating of 50% or higher,
Veterans receiving non-service-connected pension,
Veterans collecting military medical retirement pension,
Surviving Spouses of Veterans who had received the exemption prior to death.
Most Veterans will have to re-file for the exemption yearly before May 1 st. Veterans who are determined to be totally and permanently disabled only have to provide proof of eligibility the first year they use the benefit for a home. However, if the Veteran moves to another home in a different town, they will have to provide proof again. ( 32 VSA §3802(11) )
Vermont Office of Veterans Affairs Contact Information
Vermont Earned Income Tax Credit: If you are eligible for Federal Earned Income Tax credit, you may also be eligible for the Vermont earned income tax credit. Recent Federal tax changes allow military personnel to elect to treat nontaxable combat pay as earned income. The credit shall be 36 percent of the earned income tax credit granted to the individual under the laws of the United States, multiplied by the percentage which the individual's earned income that is earned or received during the period of the individual's residency in this State bears to the individual's total earned income.
What are my Vermont Military and Veterans Education Benefits?
Vermont National Guard Tuition Benefit Program: This program was established as an interest-free and forgivable loan program in 2018 by the Vermont General Assembly. Loan forgiveness means that you no longer have to pay part, or all, of the loan. The goal is to recruit and retain high-quality VTNG members.
Who is eligible for the Vermont National Guard Tuition Benefit Program? To receive this award, you must:
Attend a Vermont university, college, or eligible training institution offering certificate training or continuing education programs;
Not have previously earned an undergraduate bachelor’s degree;
Demonstrate satisfactory academic progress;
Be an active member in good standing of the Vermont National Guard;
Have successfully completed basic training or commissioning; and
Have exhausted any post 9/11/2011 tuition benefits and other federally funded military tuition assistance, not including Montgomery GI Bill benefits, post-September 11, 2001 educational program housing allowances, federal educational entitlements, National Guard scholarship grants, loans under the National Guard Educational Assistance Program, and other nontuition benefits.