March 13, 2026 - Vermont Chamber of Commerce

Issue Updates from the State House | Week of March 9, 2026

March 13, 2026

Issue Updates from the State House

Week of March 9, 2026

A weekly snapshot of key legislative activity impacting Vermont’s business community.

Career and Technical Education (CTE): The Senate Education Committee unanimously advanced S.313, a bill outlining legislative intent to establish governance models, expand access to CTE programs, align graduation credits, and integrate adult education. As the bill moves to the Senate floor, continued collaboration and attention to implementation details will be essential to turn these goals into practical outcomes.
Act 250: The Senate Natural Resources committee unanimously advanced S.325, a bill that would make amendments to 2024’s Act 181 and allow more time to make technical corrections to the Act including moving interim exemptions to 2030, delaying the road rule until 2030, and delaying the implementation of tier 3 until July 2028. The bill now moves to the Senate Appropriations for further consideration.
Event Ticketing: The House advanced H.512, a legislation aimed at curbing excessive resale of event tickets and strengthening consumer protections for venues using online ticketing platforms. The bill now moves to the Senate for further consideration.
Sister State Program: The House Appropriations committee unanimously advanced H.674, a bill that would remove the repeal of the Ireland Trade Commission and establish a process for establishing additional Vermont Sister States, strengthening Vermont’s international engagement and to fostering mutually beneficial relationships with governments outside the United States. The bill now moves to the House Floor.
School Budgets: The House Ways and Means Committee heard updated school budget statistics following Town Meeting week, showing that 36 of the 102 passed school budgets increased by more than 6 percent. Changes in federal funding, rising healthcare costs, and overall price increases continue to highlight the structural spending pressures facing Vermont’s education system.
Relocating Revenue: The House Ways and Means Committee continues to weigh options to address funding shortfalls in both the Education and Transportation Funds. A proposal would shift a portion of the Vehicle Purchase and Use Tax to the Transportation Fund while moving part of the Sales and Use Tax to the Education Fund to maintain level funding during the transition, helping stabilize transportation revenue as broader education spending reforms remain necessary.
Primary Care: The Senate Health and Welfare Committee unanimously advanced S.197, a bill aimed at increasing the use of primary care to reduce strain on hospital systems. This step toward long-term healthcare cost containment now moves to the Senate floor.
Reference Based Pricing: The Senate Health and Welfare unanimously advanced S.190, a bill continuing momentum towards health care cost containment efforts by increasing price transparency and moving the Green Mountain Care Board closer to implementation of reference-based pricing. The bill now moves to the Senate Floor.
Housing Solutions: The House Ways and Means committee advanced H.775, legislation aimed at promoting more efficient housing development and creating accountability for municipal housing targets. The bill now moves to the House Appropriations Committee for further consideration.
Parental and Family Medical Leave: The House General and Housing committee reviewed but declined to advance H.459, which have would have prohibited the concurrent use of Workers Compensation and Parental and Family Medical Leave. By not advancing the bill before the crossover deadline, the committee preserved existing policies that support job protection timelines, return-to-work planning, and staffing predictability for employers.
Water Connections: The Senate advanced S.212, a bill aimed at streamlining the wastewater connections permitting process and enhancing coordination of municipal and state-level permitting systems. This measure would help reduce timelines and increase the efficiency of new development projects and now moves to the House.
Economic Development: The Senate Economic Development, Housing, and General Affairs committee unanimously advanced S.327, a bill that invests in further funds for the downtown center tax credit, business support services and studies, removes the VEGI sunset, and establishes task forces to study potential for a new culinary institute and an interstate highway alternative to Route 22A. The Vermont Chamber is named in both task forces, and the bill now moves to the Senate floor.
Event Permitting: The Senate Economic Development, Housing, and General Affairs Committee unanimously advanced S.278, a bill that would establish cannabis event permits modeled after alcohol event permits, allow retailers to sell higher quantities, and repeal integrated license provisions. The bill now moves to the Senate Floor.
Building Energy Code: The House Energy and Digital Infrastructure committee advanced on a 6-3 vote H.718, a bill that would create structural updates to Vermont’s residential building standards framework for residences with fewer than three dwelling units. The bill now moves to the House Appropriations Committee for further consideration.
Commercial Property Assessed Clean Energy (C-PACE): The Senate Natural Resources and Energy committee unanimously advanced S.138, a bill that would expand Vermont’s PACE program to commercial and industrial buildings, allowing businesses to finance efficiency, renewable, and resilience improvements through long-term, fixed-rate property assessments. The bill now moves to the Senate Floor.
Tax Classification: The House Ways and Means committee continued work on expanding property tax classifications from two to three categories. Final edits and a vote are expected by the end of next week.
Education Misses the Mark: With the policy crossover deadline now past, House and Senate Education committees failed to advance meaningful education reform on the timeline established in Act 73 last year. Despite having nine legislative weeks to act following a taxpayer- funded summer task force, the committees will now seek special permission to continue work beyond the deadline as pressure mounts to address rising education costs and system reform.
Education Spending: The Senate Finance Committee on a 5-2 vote advanced S.220. The bill would limit how much school districts can increase per-pupil education spending in FY2028 and FY2029 by establishing an allowable growth rate tied to prior year spending, an approach intended to slow education cost growth and reduce the number of districts triggering the excess spending penalty. The bill now moves to the Senate Floor.
Housing Availability: The Senate Economic Development, Housing, and General Affairs committee on a unanimously advanced S.328, a bill that would fund important housing programs and study legal measures needed to require common interest communities to allow long term rentals, operation of family child care homes, and the building of accessory dwelling units on a homeowner’s property. The bill now moves to the Senate Floor.
Noncompete: The House recommitted H.205, a bill broadly prohibiting non-compete agreements with limited exceptions, back to the House Commerce and Economic Development Committee. While the language could still reappear in other labor-related legislation later this session, the move represents a significant setback for the bill brought on by disparate treatment of business and educational settings.
Franchises: The House Commerce and Economic Development Committee voted to unanimously advance H.733, a bill requiring businesses filing with the Secretary of State to indicate if the business is operating as a franchisee or franchisor. If voted out of committee, the bill will move to the House Floor.
Healthcare: The House Health Care committee on a 8-3 vote advanced H.585. The bill retains the allowance of Association Health Plans in 2028 if Federal law changes but adds a study due in 2027 on potential impacts to the Qualified Health Plans. These plans could be an important option for businesses and entrepreneurs struggling with high costs and limited options. The bill now moves to the House Floor.
Private Equity in Healthcare: The House Health Care committee is expected to vote later today on H.583, a bill regulating private equity in healthcare related private businesses. While the bill has improved since introduction, the Senate will need to consider the highly problematic provisions that persist relating to regulation and reporting requirements for privately owned businesses. The bill will move to the House Floor if advanced.

March 13, 2026

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Investment Income Tax Debate Raises Larger Questions About Vermont’s Fiscal Strategy

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Investment Income Tax Debate Raises Larger Questions About Vermont’s Fiscal Strategy

As Vermont lawmakers grapple with rising property taxes and growing pressure on the Education Fund, a new proposal to tax investment income is emerging as one potential source of revenue.

The concept surfaced this week during several hours of discussion in the Senate Finance Committee as lawmakers explored amendments to S.282 that would apply a surcharge to certain types of investment earnings in Vermont. The proposal mirrors a structure used at the federal level and would apply to income already reported on federal tax returns.

The conversation reflects a familiar pattern in Montpelier this time of year. As budget pressures mount and property tax projections continue to draw attention, lawmakers are looking across the tax code for potential sources of revenue to help stabilize the state’s finances.

Supporters of the idea argue that raising new revenue from investment income could help offset property tax pressures tied to education funding.

At the same time, the discussion highlights a broader fiscal question facing the state. Are Vermont’s affordability challenges primarily a revenue issue, or are they driven by the underlying growth in public spending?

What the Proposal Signals

While the proposal itself may evolve or ultimately stall, the debate reflects a growing effort by some policymakers to look toward new revenue sources to help address Vermont’s fiscal pressures.

Roughly 12,000 Vermonters currently pay the federal tax on investment income that serves as the model for the proposal. Revenue from those taxpayers is highly concentrated among higher income households, meaning policies built around investment income often rely on a relatively small number of taxpayers.

Because investment earnings fluctuate with financial markets and economic cycles, taxes tied heavily to this income can produce more volatile revenue streams than traditional sources such as income or sales taxes.

A Larger Affordability Question

The central issue raised during the hearing was whether new revenue alone can address the affordability challenges Vermonters are experiencing.

Property taxes are rising largely because education spending has continued to grow faster than available revenue sources. Without addressing the underlying cost trajectory of the education system itself, new taxes primarily change where funding comes from rather than addressing the structural pressures within the system.

In that sense, a tax on investment income could generate additional revenue for the Education Fund, but it would not directly change the spending trends that are driving property tax increases.

Why Business Leaders Are Watching

The proposal also intersects with the structure of Vermont’s economy.

Many Vermont companies operate as pass through businesses such as LLCs, partnerships, and S corporations. In these structures, business profits are reported on the owner’s personal income tax return. Taxes applied at the individual level therefore influence the after-tax income that business owners use for reinvestment, hiring, and expansion.

For that reason, proposals affecting investment income often draw attention from the business community and investors evaluating Vermont’s long term economic climate.

The discussion in committee also underscored the importance of evaluating tax policy changes through multiple perspectives. Policies that affect investment income intersect with entrepreneurship, business ownership, and long-term capital investment in Vermont’s economy.

The Conversation Ahead

Even if the proposal itself does not advance this year, the discussion surrounding S.282 highlights a broader debate that is likely to continue.

Improving affordability in Vermont will ultimately require addressing both sides of the fiscal equation. Policymakers will need to manage spending growth while also supporting the economic conditions that expand the state’s tax base over time.

The balance between those priorities, fiscal sustainability and economic competitiveness, will likely remain central to Vermont’s policy discussions in the months ahead.

March 13, 2026

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Federal Tax Conformity Bill Advances with Expanded R&D Incentives for Vermont Businesses

March 13, 2026March 13, 2026

Federal Tax Conformity Bill Advances with Expanded R&D Incentives for Vermont Businesses

The House Ways and Means Committee has advanced a miscellaneous tax bill updating Vermont’s conformity with federal tax law and making several targeted changes to the state’s tax code.

While many provisions are technical, the decisions in this bill will influence how Vermont businesses calculate taxable income, deduct certain expenses, access tax incentives, and ultimately decide where to invest in research, development, and innovation.

Because Vermont does not automatically conform to federal tax law, the Legislature periodically reviews changes made by Congress and decides which provisions to adopt at the state level. Following the passage of H.R.1 last summer, lawmakers are now determining how those federal tax changes should apply within Vermont’s tax system — and where the state will take a different policy approach.

Why it matters: For businesses making investment decisions, these conformity updates can matter as much as changes to tax rates. The structure of deductions, credits, and cost recovery rules influences where companies choose to invest in equipment, research, and workforce expansion.

What This Means for Vermont Businesses

Federal conformity decisions shape how businesses calculate taxable income and how certain investments are treated under Vermont’s tax code.

Many provisions in this bill affect how companies recover the cost of investments such as equipment purchases, research and development, and financing. These rules influence how businesses plan capital investments, evaluate new projects, and forecast future tax liability.

Several federal provisions that expand deductions for operating expenses will flow through to Vermont, while lawmakers chose not to adopt certain federal tax preferences tied to investment income and international taxation.

For Vermont businesses, the practical result is straightforward: some federal tax changes will apply automatically to Vermont returns, while others will require separate state adjustments.

Research and Development Policy

Research and development policy is one of the most closely watched business provisions in the bill.

In recent years, federal tax rules changed how companies deduct research expenses, requiring many businesses to spread those deductions over five years rather than deducting them immediately.

Recent federal legislation restored immediate deductibility for smaller businesses. The House Ways and Means Committee advanced the following conformity choices:

Small businesses, as defined under federal law (those with average annual receipts under roughly $31 million), will be able to fully deduct research expenses.
Larger businesses will continue to amortize those expenses over five years for Vermont tax purposes.

Earlier concepts considered would have permanently disallowed the deduction of research expenses at the state level. That proposal raised significant concerns among innovation-driven employers.

The final structure reflects extensive collaboration among the House Ways and Means Committee, the Administration, tax professionals, and the Vermont Chamber of Commerce. Chair Kornheiser noted during the committee’s discussion the Vermont Chamber’s role in helping shape the R&D framework and bringing business expertise into the policy development process.

Major Expansion of Vermont’s R&D Tax Credit

The bill also significantly expands Vermont’s existing research and development tax credit.

Currently, Vermont’s credit equals 27 percent of the federal R&D credit for qualifying research conducted in the state.

The bill increases that rate to 75 percent of the federal credit and raises the annual statewide cap from $3 million to $5 million.

The takeaway: If enacted, this would represent one of the largest expansions of Vermont’s research incentive in recent years.

Other Federal Tax Changes Vermont Will Adopt

Several federal changes affecting business taxation will flow through to Vermont under the bill.

More generous expensing of business equipment: Federal law increased the amount businesses can immediately expense for depreciable assets from $1 million to $2.5 million. Vermont will conform to this change, allowing businesses to recover equipment costs more quickly.
Expanded business interest deductions: Federal law increased the allowable deduction for business interest from 30 percent to 50 percent of adjusted taxable income. Vermont will conform to this provision, allowing businesses with significant borrowing to deduct a larger share of interest expenses.
Changes to controlled foreign corporation reporting rules: Federal adjustments to pro rata share rules will flow through to Vermont, affecting companies that hold interests in certain foreign corporations.
Updates to corporate charitable deduction limits: Federal law changed how corporations calculate deductions for charitable contributions. Vermont will conform to those changes as well.
Federal expansion of the Child and Dependent Care Tax Credit will also flow through to Vermont’s corresponding state credit.

Where Vermont Chose a Different Path

In several areas, the Committee chose not to adopt new federal tax preferences.

These include:

Qualified Small Business Stock (QSBS): Federal law expanded the exclusion for capital gains on certain startup investments. Vermont will not conform to that change, meaning those gains remain taxable at the state level.
Section 250 international income deductions: The bill decouples Vermont from federal deductions related to certain international income earned by multinational corporations. This provision represents one of the largest revenue components in the bill.
Special depreciation for certain production facilities: Federal law created a new bonus depreciation provision for some manufacturing property. Vermont will not adopt that provision and will instead continue requiring the property to be depreciated over time.

The Bottom Line

Federal conformity bills often receive limited attention because many provisions are technical.

However, the choices made in these updates can significantly influence how Vermont businesses calculate taxable income and how the state structures economic incentives.

This year’s bill reflects a mix of policy decisions: adopting several federal changes that expand business deductions, declining to follow others that would reduce state revenue, and significantly expanding Vermont’s research and development tax credit.

The Vermont Chamber will continue working with policymakers to ensure Vermont’s tax system supports a competitive, predictable environment for the businesses that drive Vermont’s economy.