Veteran taxes by state
Vermont veteran taxes
How Vermont treats military retired pay and Survivor Benefit Plan annuities in its income tax, and its property tax and vehicle registration relief for disabled veterans — from the state’s own pages.
On this page5 sections
- Military retired pay
- Partly exempttax year 2025
- SBP annuities
- Partly exempt
- Property tax
- Exemption or credit
- Vehicle registration
- Fee waiver or discount
Military retired pay in Vermont
Partly exempttax year 2025Sources 1, 2, 3
From tax year 2025 (Act 71 of 2025), Vermont exempts all federally taxable U.S. military retirement income for taxpayers of any filing status with adjusted gross income of $125,000 or less (32 V.S.A. § 5830e(d)). Between $125,000 and $175,000 the exempt share shrinks in proportion: ($175,000 minus AGI) divided by $50,000. At $175,000 or more no exemption is available.
Survivor Benefit Plan annuities
Partly exemptSources 2, 3, 1
The same income-tested exemption covers U.S. military survivor benefit income received by an eligible beneficiary (32 V.S.A. § 5830e(d)): fully exempt at adjusted gross income of $125,000 or less, phased out between $125,000 and $175,000. The Department of Taxes’ worksheet describes this income as military survivor benefit income reported on a 1099-R from the Defense Finance and Accounting Service; it does not use the name Survivor Benefit Plan.
Property tax relief for disabled veterans
Exemption or creditSources 4, 5
Vermont exempts at least $10,000 of the appraisal value of a residence owned and occupied by a veteran (or the veteran’s spouse, widow, widower or child) who receives VA or military disability compensation for at least 50 percent disability, death compensation, dependency and indemnity compensation, or a disability pension (32 V.S.A. § 3802(11)). A town may vote to raise the exemption to up to $40,000; both amounts apply to municipal and education taxes.
- The Department of Taxes lists three ways to qualify: disability compensation for 50% or higher disability, a VA pension for non-service-connected disability, or military retirement pay for a permanent medical military retirement.
- Applications go to the Vermont Office of Veterans Affairs before May 1, with the VA benefits letter. Only one exemption is allowed per property; any part used for business or rental is not exempt.
- Under the statute, an application based on permanent disability is filed only for the first year and stays on the grand list until the property is transferred; the Department of Taxes page says the application must be filed every year.
Surviving spouse
An unremarried widow or widower of a previously qualified veteran is entitled to the exemption whether or not receiving government compensation or pension (32 V.S.A. § 3802(11)(C)); the Department of Taxes also lists minor children of veterans who met the criteria at death.
Vehicle registration for disabled veterans
Fee waiver or discountSources 6, 7, 8, 9
Vermont charges no registration fees (including the annual emissions fee and electric vehicle infrastructure fees) to a resident veteran discharged under other than dishonorable conditions for a motor vehicle acquired with financial assistance from the U.S. Department of Veterans Affairs, or a lifetime replacement of that vehicle, with an approved VA Form 21-4502 (23 V.S.A. § 378). The same vehicles pay no title fee (23 V.S.A. § 2002) and are excepted from the motor vehicle purchase and use tax (32 V.S.A. § 8911).
- The Department of Motor Vehicles’ Disabled Veteran plate requires a Vermont Certificate of Veteran Status (form VG-168) certified by the Office of Veterans Affairs and a medical report (form VS-113) unless one was filed in the last four years; the page does not state a fee waiver for the plate.
- The sources read do not provide for a surviving spouse.
Sources
Each source was read on October 28, 2026 on the state’s own site, the normal way. The numbers in the sections above point here.