VT H0603

Military disability retirement income provided under 10 U.S.C. chapter 61 would be fully excluded from Vermont taxable income, regardless of the taxpayer's income level

Other U.S. military retirement income and survivor benefit income would be fully excluded for taxpayers with federal adjusted gross income at or below $125,000

Partial exclusion applies for taxpayers with income between $125,000 and $175,000, with the exclusion phasing out proportionally; no exclusion available for income at or above $175,000

Taxpayers may claim the military retirement/survivor benefit exclusion in addition to other retirement income exclusions, whereas other exclusions require choosing only one

Takes effect retroactively on January 1, 2026, applying to taxable years beginning on and after that date