This week, the Vermont Chamber testified in the House Ways and Means Committee on property tax classifications—an issue with far-reaching implications for education finance, business competitiveness, and overall economic stability. Vermont faces a pressing challenge: affordability is increasingly strained by rising property tax rates.

According to the U.S. Census Bureau, in 2023, Vermont ranked third in total taxes per capita ($6,948.15) and first in property taxes per capita ($1,870.04). This is a position Vermont has held since 1999, when the property tax per capita was $650.27. Adjusted for inflation—using an approximate multiplier of 1.7—that amount would be about $1,105 today. Instead, the current rate is around 70% higher, indicating that property tax burdens have surged well beyond general inflation, exacerbating affordability challenges for both residents and businesses.

The Core Issue

The Vermont Chamber of Commerce acknowledges the need for reform to address these affordability concerns. However, we have concerns about introducing new property tax classifications. Following testimony from the Vermont Chamber and industry stakeholders, revised classifications were introduced:

• Homestead
• Nonhomestead, Apartment
• Nonhomestead, Nonresidential
• Nonhomestead, Residential

While this revision reduces the nine categories initially reviewed by the committee earlier in the week, the Vermont Chamber remains concerned. The current proposal creates an opening for inequitable tax treatment by singling out businesses with a category specific to them. Introducing multiple new classifications could lead to:

• Increased Complexity: More categories may obscure accountability and reduce transparency.
• Administrative Inefficiencies: An expanded system could result in unpredictability and higher administrative costs.
• Unintended Business Impact: Additional classifications might impose higher or less favorable rates on businesses, discouraging investment and growth.

Recommendations for a Better Path Forward

To address the growing gap between property tax obligations and economic reality—while maintaining a system that is simple, equitable, transparent, efficient, and stable—the Vermont Chamber is advocating for legislators to combine the Nonhomestead, Apartment and Nonhomestead, Nonresidential categories into one Nonhomestead category. Both property types share similar market-driven and investment characteristics, which differentiates them from Nonhomestead, Residential properties. This consolidation would eliminate the potential for inequitable tax treatment of businesses and promote fairness across the board. Recommendations from the Vermont Chamber remain:

• Postpone or Scale Back the Expansion of Classifications: Delay or limit the introduction of new tax categories until a comprehensive analysis demonstrates clear benefits.
• Consolidate Similar Categories: Streamline the system by grouping similar property types to preserve clarity and fairness.
• Institute a Mandatory Regular Review Mechanism: Establish a periodic review process to ensure that the tax system remains responsive to economic changes and aligned with community needs.

Looking Ahead

The House Ways and Means Committee is expected to vote on this bill early next week. It is critically important that any property tax reforms enhance stability and fairness, not undermine them. By focusing on these core principles, Vermont can tackle its affordability challenges without creating a system that singles out businesses or adds unnecessary complexity. While there are concerns with the current proposal, we remain committed to staying at the table to ensure that the business community has a proactive voice and that any changes remain equitable, transparent, and supportive of economic growth.

The Vermont Chamber testified this week in the House Ways and Means Committee on proposed property tax classification changes, which will be a critical component to the future of education finance. From taxes to housing and healthcare, businesses and residents are grappling with mounting pressures. The message is clear: Vermont must address its most significant issues with bold, comprehensive reforms in order to remain competitive and economically resilient. A path toward sustainability and predictability is needed to support Vermont’s economic drivers.

The proposed system expands property classifications into nine distinct categories. Although this could enable a more nuanced tax framework, there are concerns about the feasibility of implementation. In the Vermont Chamber’s recent Business Climate Survey, 86% of businesses expected last year’s property tax increases to impact their financial health. We encouraged the committee to recognize the significant tax burden businesses face, to support investment and growth, and to ensure that Vermont remains competitive in attracting business investment.

While there are concerns with the current proposal, we remain committed to staying at the table to ensure that the business community has a proactive voice and that any changes remain equitable, transparent, and supportive of economic growth. Meaningful reforms will require all stakeholders to engage in difficult conversations. 

As a member-driven organization, we value your feedback, which will help shape our advocacy work as we continue these conversations. Please consider taking this micro-survey to inform our efforts.

As Vermont’s Legislature shifts into high gear amid pressing fiscal challenges, discussions on the Property Tax Yield Bill have begun in earnest. This bill is central to determining statewide property tax rates using a funding formula, school budget votes, and other key factors.

In Vermont, the overall property tax framework rests on two pillars—the Municipal Tax Rate and the Education Tax Rate—and applies to two property classifications: homestead properties (the owner-occupied principal dwelling and its surrounding land) and non-homestead properties, such as rental units and commercial spaces. The education tax rate for non-homestead properties differs from that for homesteads. With affordability concerns reaching a critical point across the state, the Vermont Chamber advocates for a uniform bill change that equalizes the impact on both homestead and non-homestead taxpayers.

What Is Being Considered

Based on the Education Fund outlook for fiscal year 2026, several scenarios are under debate by the House Ways and Means Committee. Under these scenarios, the homestead property tax rate is projected to range from $1.577 to $1.677 per $100 of assessed value, while the non-homestead rate is expected to vary between $1.703 and $1.791 per $100.

A significant factor influencing these projections is the Administration’s one-time $77.2 million General Fund transfer. The House Ways and Means Committee is exploring different approaches for this transfer—options include applying the full amount directly to reduce tax bills or allocating half of it to a transition reserve.

The Vermont Chamber’s Advocacy

Amid these evolving discussions, the Vermont Chamber continues to advocate for a uniform bill change that ensures an equal impact on both homestead and non-homestead taxpayers. This approach aims to provide greater clarity and predictability for both businesses and households across Vermont.

With the crossover deadline for fiscal policy looming next week and legislative debates intensifying around education finance and broader systemic challenges, the decisions made in Montpelier will resonate statewide. The Vermont Chamber remains committed to championing data-informed solutions that support robust economic growth and a balanced tax environment.