Military Pension Tax Exemption for Workforce Recruitment

Vermont is currently one of only three states (CA, VT, VA) and Washington, D.C. that fully tax military retirement pay. Military retirees often receive their pension for 20 years of service between 38 and 42 years old and are uniquely positioned to continue contributing to the workforce in impacted industries until they reach traditional retirement age. Following a press conference held by a bipartisan group of legislators and Administration officials, the Vermont National Guard and Veterans Affairs Caucus sent a letter urging the House and Senate to raise the threshold of federally taxable U.S. military retirement pay in S.53 from $10,000 to $30,000.  The Vermont Chamber supports the $3.1 million expenditure in the Governor’s proposed 2022 Budget for a full exemption. This will incentivize military retirees to either stay or move to Vermont and increase the diversity of our communities while also strengthening our workforce and helping to address the severe workforce labor shortages.