Vermont Veteran Tax Credit

Title 32, section 5830g was added by 2025 Act 71, section 5, and is the newest veteran benefit in Vermont. A resident individual or part-year resident individual who served in the uniformed services is entitled to a refundable credit against the tax imposed by section 5822 for the taxable year. The amount is $250.00 at a federal adjusted gross income of $25,000.00 or less. Between $25,000.00 and $30,000.00 the credit is $250.00 less $5.00 for each $100.00 of AGI exceeding $25,000.00, so it runs out exactly at $30,000.00. At $30,000.00 or more there is no credit. Refundable is the word to hold on to. A veteran whose income is VA disability compensation and Social Security has little or no Vermont tax to offset, and a nonrefundable credit would be worth nothing to them. This one is paid out. It is aimed at precisely the veterans whose income is too low to benefit from an exclusion. The eligibility test is narrower than it sounds and wider than most. Subsection (b) says the taxpayer is eligible provided the taxpayer has a discharge record, or other record of separation from active duty, verifying service in the uniformed services. There is no honorable discharge requirement written into the section, no wartime service period, no minimum length of service, and no disability rating. What the statute asks for is a record that shows you served. A veteran who has been told for years that an other than honorable characterization closes state doors should read this section before assuming it closes this one. "Uniformed services" rather than "armed forces" is also deliberate, and the Department of Taxes reads it the broad way: Air Force, Army, Coast Guard, Marines, Navy, Space Force, National Guard, the U.S. Public Health Service Commissioned Corps, and the NOAA Commissioned Officer Corps. A retired Public Health Service officer is a veteran for this credit. Two people can claim it on one return. The Department of Taxes states that married veterans filing jointly with a combined AGI under $30,000 may both claim the credit, so a household of two veterans at low income is looking at up to $500. The dates are worth getting right because the credit is claimed retroactively. The Governor signed Act 71 on June 25, 2025. Section 6 of the act says that notwithstanding 1 V.S.A. 214 the act takes effect retroactively on January 1, 2025 and applies to taxable years beginning on and after January 1, 2025. The first returns carrying it were filed in 2026 for tax year 2025. Section 4 of the same act added 32 V.S.A. 5813(aa), which records the statutory purpose of the credit as providing financial support to Vermonters who served in the U.S. uniformed services. That matters only if the credit is later challenged or reviewed, but it is the legislature's own statement of what the credit is for. The Office of Veterans Affairs tax page does not mention this credit at all. The Department of Taxes page does.