This State's Residents Qualify for Tax Credits

While federal stimulus payments may have ended, Vermont residents are still eligible for up to $5,600 in state tax credits.

The money comes courtesy of the Vermont Property Tax Credit, which helps homeowners in the state pay their property taxes. Residents should be eligible based on their 2023/2024 property taxes if their property qualifies as a homestead and they meet other criteria.

The amount available depends on several factors, but the maximum credit is $5,600 for the education property tax portion and $2,400 for the municipal property tax portion.

To claim the tax credit, Vermont residents have until April 15, 2024, with a $15 late fee applying if you claim later than that. No further claims will be accepted after October 15, 2024.

"Because the property tax credit can reduce monthly expenses and boost discretionary income, some residents may profit from it," finance expert Abner Miller told Newsweek.

Not all property owners qualify. For one, your property must be a "homestead" with a homestead declaration filed before the October 15 deadline. Homesteads are generally defined as the "principal dwelling and parcel of land surrounding the dwelling," according to Vermont's taxation department.

You also must be living in Vermont for all of 2023 and not claimed as a dependent of another taxpayer during the year.

Additionally, you must occupy the property as your homestead as of April 1, 2024, and your household income cannot exceed $128,000 for the 2023 calendar year.

"Because the property tax credit does not fully offset property taxes or other expenses like mortgage interest or heating bills, some residents may not benefit from it," Abner said. "They might also have trouble establishing their eligibility or timely submitting their claim."

Tax Rates Set to Rise in 2024

The tax credit is available as Vermont residents anticipate surging costs on their homes in the new year. This fall, the Vermont Department of Taxes projected an 18.5 percent increase in residents' property tax rates for 2024.

"For Vermonters and policymakers concerned about property taxes, housing affordability, or overall tax burden, this letter should sound a major alarm," Tax Commissioner Craig Bolio wrote in a previous letter.

Bolio said that for every $100 of property value, the average homestead property tax rate will likely surge from $1.54 to $1.80 in fiscal year 2025, which starts July 1, 2024.

While the actual property tax increase will depend on the town, average income tax rates are also likely to increase from 2.33 percent to 2.67 percent in the next fiscal year.

That means property taxes on a $250,000 home would rise by about $650.

Michael Ryan, a finance expert at michaelryanmoney.com, said the tax credits are a "lifeline" for about two-thirds of the Vermont homestead owners who qualify income-wise.

"With the federal stimulus checks now a thing of the past, this tax credit steps in to ease the burden," Ryan told Newsweek. "It's like Vermont's own version, but specifically targeting those daunting property tax bills."

An increase in education spending of roughly 12 percent is a major contributor to the potential tax hikes. Act 127 was passed last year and will bring more funding to school districts depending on need, although not everyone agrees with the decision.

"Vermont's tax burden is already, unfortunately, among the highest in the country, and families are bearing an incredible burden with increased costs of living across the board, including new and higher taxes and fees imposed by the Legislature," Republican Governor Phil Scott previously said in a statement. "Put simply, a nearly 20 percent property tax increase would hurt Vermonters and our economy, and we cannot let it happen."

Uncommon Knowledge

Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.

Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.

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