VT S0017

U.S. military retirement income would be fully exempt from Vermont state income tax, removing the current partial exclusion that treated it similarly to Civil Service Retirement System income with income-based limitations

U.S. military survivor benefit income received by surviving spouses or dependents of deceased service members would also be fully exempt from Vermont income tax

The exemption applies retroactively to taxable years beginning on and after January 1, 2026

Taxpayers eligible for both the new military retirement exemption and Social Security income exclusion must still choose one exclusion, but cannot claim both in the same tax year

Introduced with broad bipartisan support from 21 senators including Collamore, Beck, Brennan, Brock, and others