Vermont Disabled Veteran Property Tax Exemption

Title 32, section 3802(11) exempts real and personal property to the extent of $10,000.00 of appraisal value, except any part used for business or rental, occupied as the established residence of and owned in fee simple by a veteran, the veteran's spouse, widow, widower, or child, or jointly by any combination of them. The eligibility test is four alternatives and only the first one has a percentage in it. One or more of the owners must be receiving disability compensation for at least 50 percent disability, or death compensation, or dependency and indemnity compensation, or pension for disability paid through any military department or the Veterans Administration. That fourth alternative is the one that gets dropped from summaries and it is the widest. A VA pension for disability, what VA now calls Veterans Pension and what the Office of Veterans Affairs calls Improved Pension, is not service-connected and carries no rating at all. A wartime veteran with no service-connected rating who is paid VA pension qualifies for this exemption on the same terms as a veteran rated 50 percent. That is why the rating filter in VetTOC does not hide this entry at a low rating. Paragraph (B) adds a further path that is easy to miss because it is written as an exception to a definition. The terms of the subdivision follow 38 U.S.C. 101, except that eligibility shall not be denied where the exemption is based on retirement for disability and retirement pay is received from a federal agency other than the Veterans Administration. A service member medically retired by their own department, and paid by that department rather than by VA, is inside the exemption. Two other definitional carve-outs sit alongside it. The federal definitions apply as if federal law recognized a civil union or a civil marriage in the same manner as Vermont law, and the age and marital status limits in 38 U.S.C. 101(4)(A) do not apply, which is what lets an adult child hold the qualifying ownership interest. The amount is a floor, not the number most Vermonters get. By majority vote at an annual or special meeting warned for the purpose, a town may increase the exemption to up to $40,000.00 of appraisal value, and the increase stays in effect for future years until a similar vote amends or repeals it. The Department of Taxes reports that more than 90 percent of towns have voted the $40,000 figure. Ask the town clerk which amount is in force before assuming either number. Both figures apply against the municipal and the education grand lists, so both halves of a Vermont tax bill are computed on the lower value. For any amount voted above $10,000 the town, not the State, pays the forgone education tax revenue, which is the reason the vote exists at all and the reason a town can decline it. The filing is unusual in two ways. It goes to the Office of Veterans Affairs in Montpelier rather than to the town listers, and the deadline is before May 1 of the year. Proof is a written application for the compensation or pension plus a written statement from the military department or VA showing that the compensation or pension is being paid. The Office recommends requesting that letter from VA no later than April 1, because the letter has to be in hand before the deadline, not merely requested. Since 2023 Act 144 (Adj. Sess.), section 9, effective June 3, 2024, an application based upon permanent disability is only required to be filed before May 1 of the first year for which the exemption is sought, and the exemption then remains on the grand list until title to the property is transferred. Accounts written before June 2024, including the federal Army benefits library, still say a veteran must re-file every year. For a permanent disability that is no longer the law. There is a gap between the statute and the agency on that point and this entry records it rather than resolving it. The statute says permanent disability. The Office of Veterans Affairs page says the once-only rule is for veterans deemed totally and permanently disabled. A veteran whose 50 percent rating is static and permanent but not total sits between the two readings, and should ask the Office which one it is applying before skipping a year. Moving house restarts the clock. The Office states that a veteran who moves to a new home in a different town has to provide proof of eligibility again. Only one exemption may be allowed on a property, so two qualifying veterans under one roof do not stack. The property must be the established residence and the part used for business or rental is carved out. One drafting artifact is worth knowing if you read the statute yourself. The sentence beginning "Only one exemption may be allowed on a property" appears twice, once at the end of subdivision (A)(i)(II) and again as the whole of subdivision (A)(ii). The 2024 amendment added the new subdivision without striking the old sentence. They say the same thing; nothing turns on it.