Vermont Veteran Benefits 2026: Property Tax Exemptions and Military Retired Pay Tax
The state benefits Vermont gives veterans and their surviving spouses: property tax exemptions, how the state taxes military retired pay, and other benefits, each with who qualifies, the amount, how to apply and the official source.
Vermont exempts at least $10,000 of a home's appraised value from property tax for veterans receiving VA disability compensation for a 50%+ disability (or a VA disability pension or death/DIC compensation), and their spouse, widow(er) or child. Towns may vote to raise the exemption to $40,000 on the municipal grand list. Starting with tax year 2025, military retirement pay and military survivor benefits are fully exempt from state income tax at AGI of $125,000 or less, phasing out to zero at $175,000. Act 71 of 2025 also created a $250 refundable Veteran Tax Credit for veterans with AGI of $25,000 or less, phasing out to zero at $30,000. (sources)
Official sources Checked against official sources on November 4, 2026. This page lists only benefits confirmed on an official state or federal page; counties and cities may offer more.
Property tax exemptions for veterans in Vermont
| Benefit | Who qualifies | Amount | How to apply | Source |
|---|---|---|---|---|
| Disabled veterans' property tax exemption (32 V.S.A. § 3802(11)) | A Vermont home owned and occupied as the established residence of a veteran or the veteran's spouse, widow, widower or child, where one of them receives VA or military disability compensation for at least 50% disability, death compensation, dependency and indemnity compensation, or a pension for disability. An unremarried widow or widower of a previously qualified veteran stays eligible even without receiving compensation. Any part used for business or rental is excluded. No age or income limit. One exemption per property. | $10,000 of appraisal value, statewide minimum, on both the municipal and education grand lists. A town may vote to raise it to as much as $40,000 of appraisal value (the increase applies to the municipal grand list). | Before May 1, file with the Vermont Office of Veterans Affairs a written application and a written statement from the VA or military department showing the compensation or pension is being paid (the VA Summary of Benefits letter). File each year. If the exemption is based on permanent disability, you only need to file before May 1 of the first year; the exemption then stays on the grand list until the property changes hands. | 32 V.S.A. § 3802(11), Vermont Statutes; see also Vermont Department of Taxes FS-1003, Property Tax Assistance for Veterans (https://tax.vermont.gov/sites/tax/files/documents/FS-1003.pdf) |
Is military retired pay taxed in Vermont?
| Treatment | Amount or limit | Source |
|---|---|---|
| Full exemption of federally taxable U.S. military retirement income and military survivor benefit income for filers of any status with federal AGI of $125,000 or less. Partial exemption for AGI over $125,000 and under $175,000. No exemption at AGI of $175,000 or more (32 V.S.A. § 5830e(d), Act 71 of 2025, effective from tax year 2025). Claimed on Schedule IN-112, Part I, Line 13. Filers who use this exemption may also claim one other retirement exclusion under 32 V.S.A. § 5830e if eligible. | AGI <= $125,000: 100% exempt. AGI over $125,000 and under $175,000: exempt share = (175,000 - AGI) / 50,000 (the state worksheet rounds this to 2 decimals and caps it at 1), multiplied by the taxable military retirement/survivor income. AGI >= $175,000: $0. Tax year 2025 (filed in 2026). | tax.vermont.gov |
For the dollars this treatment adds to (or saves on) a retiree’s state tax in 2026, see the military retirement tax by state study; for the pension itself, the military retirement pay calculator.
Other Vermont veteran benefits
Other benefits
| Benefit | Who qualifies | Amount | Source |
|---|---|---|---|
| Vermont Veteran Tax Credit (refundable state income tax credit, Act 71 of 2025) | Vermont residents and part-year residents with a discharge record or other record of separation from active duty that verifies service in the uniformed services. AGI must be $30,000 or less, with the full credit at $25,000 or less. | $250 refundable credit if AGI <= $25,000. For AGI over $25,000 and under $30,000, the credit drops by $5 for every full $100 over $25,000. No credit at AGI >= $30,000. Part-year residents' refundable credits are prorated by their Vermont share of income. Claimed on Schedule IN-112, Part II. Applies from tax year 2025. | tax.vermont.gov |
Common questions
Does Vermont have a property tax exemption for disabled veterans?
Yes: Disabled veterans' property tax exemption (32 V.S.A. § 3802(11)). Who qualifies: A Vermont home owned and occupied as the established residence of a veteran or the veteran's spouse, widow, widower or child, where one of them receives VA or military disability compensation for at least 50% disability, death compensation, dependency and indemnity compensation, or a pension for disability. An unremarried widow or widower of a previously qualified veteran stays eligible even without receiving compensation. Any part used for business or rental is excluded. No age or income limit. One exemption per property.. Amount: $10,000 of appraisal value, statewide minimum, on both the municipal and education grand lists. A town may vote to raise it to as much as $40,000 of appraisal value (the increase applies to the municipal grand list). (32 V.S.A. § 3802(11), Vermont Statutes; see also Vermont Department of Taxes FS-1003, Property Tax Assistance for Veterans (https://tax.vermont.gov/sites/tax/files/documents/FS-1003.pdf)).
How do I apply for the Vermont veteran property tax exemption?
Before May 1, file with the Vermont Office of Veterans Affairs a written application and a written statement from the VA or military department showing the compensation or pension is being paid (the VA Summary of Benefits letter). File each year. If the exemption is based on permanent disability, you only need to file before May 1 of the first year; the exemption then stays on the grand list until the property changes hands. (32 V.S.A. § 3802(11), Vermont Statutes; see also Vermont Department of Taxes FS-1003, Property Tax Assistance for Veterans (https://tax.vermont.gov/sites/tax/files/documents/FS-1003.pdf)).
Does Vermont tax military retirement pay?
Full exemption of federally taxable U.S. military retirement income and military survivor benefit income for filers of any status with federal AGI of $125,000 or less. Partial exemption for AGI over $125,000 and under $175,000. No exemption at AGI of $175,000 or more (32 V.S.A. § 5830e(d), Act 71 of 2025, effective from tax year 2025). Claimed on Schedule IN-112, Part I, Line 13. Filers who use this exemption may also claim one other retirement exclusion under 32 V.S.A. § 5830e if eligible. Amount or limit: AGI <= $125,000: 100% exempt. AGI over $125,000 and under $175,000: exempt share = (175,000 - AGI) / 50,000 (the state worksheet rounds this to 2 decimals and caps it at 1), multiplied by the taxable military retirement/survivor income. AGI >= $175,000: $0. Tax year 2025 (filed in 2026). (tax.vermont.gov).
What other benefits do veterans get in Vermont?
Vermont Veteran Tax Credit (refundable state income tax credit, Act 71 of 2025) (tax.vermont.gov). Who qualifies and the amounts are in the tables above.
Sources
- 32 V.S.A. § 3802(11), Vermont Statutes; see also Vermont Department of Taxes FS-1003, Property Tax Assistance for Veterans (https://tax.vermont.gov/sites/tax/files/documents/FS-1003.pdf)
- tax.vermont.gov
Every row above is copied from the official page linked beside it. Benefits change with new laws and local decisions, so confirm the amount and the deadline with the office that runs the program before you apply. QuantCalc is calculation software, not legal, tax or benefits advice. Last updated November 4, 2026.
Related
Vermont senior property tax relief → Vermont state income tax for retirees → Veteran benefits in every state → Military retirement tax by state 2026 → Military retirement pay calculator → 2026 VA disability rates → Military retiree and VA COLA 2027 → VA loan limits 2026 →