Are you a homeowner or considering buying a home in Vermont? Understanding property taxes is essential for effective financial planning and homeownership. Vermont’s property tax system includes both local and state levies, each playing a crucial role in funding essential services like education. This guide will walk you through everything you need to know about Vermont property taxes, helping you make informed decisions.
Key Takeaways
- Two Main Property Taxes: Vermont has local property taxes and a state education tax.
- High Education Tax Rate: The statewide education tax rate is among the highest in the U.S. at 1.73%.
- County Variations: Property tax rates differ significantly across Vermont’s counties.
- Common Level of Appraisal (CLA): Understanding CLA is key for accurate tax assessments.
- Competitive Rates: Vermont’s property taxes are generally favorable compared to neighboring states like New Hampshire.
Understanding Vermont Property Taxes
What Are Property Taxes?
In Vermont, property taxes are collected through two primary channels: local property taxes set by municipalities and a state-level education tax. The education tax is the largest source of property tax revenue, funding public schools and educational programs. Combined, these taxes make Vermont’s property tax rates some of the highest in the United States.
How Are Property Taxes Calculated?
Property taxes in Vermont are based on a property’s assessed value and applicable tax rates. Here’s how it works:
- Assessed Value: Local assessors, known as listers, determine your property’s assessed value, which reflects its market value. If your assessed value is less than 80% of the market value, a reappraisal is required by the state.
- Local Property Tax Rate: Each municipality sets its own tax rate, which is applied to your property’s assessed value.
- State Education Tax Rate: The state sets the Common Level of Appraisal (CLA) for each tax district, adjusting the tax rate to ensure fairness based on property appraisals.
Who Pays Property Taxes?
Property taxes apply to all property owners, but rates vary based on the property’s classification:
- Primary Residences (Homesteads): Typically enjoy lower tax rates.
- Commercial, Rental, and Secondary Residences: Subject to higher tax rates.
Benefits of Understanding Property Taxes
- Financial Planning: Knowing your property tax obligations helps in budgeting.
- Fair Contributions: The CLA ensures taxes are based on actual property values.
- Supporting Education: Property taxes play a significant role in funding local schools and educational programs.
2024 Developments in Vermont Property Taxes
In 2024, Vermont’s property tax system saw notable changes, especially regarding education funding and tax rates. Here’s an overview of the key updates:
Education Property Tax Rates
For the fiscal year 2025 (covering the 2024-2025 property tax year), the Vermont Legislature set the statewide nonhomestead education tax rate at $1.391 per $100 of property value. The homestead property yield was established at $9,893, aiming for an average homestead property tax rate of $1.311 per $100 of property value. Additionally, the homestead income-sensitized yield was set at $10,110, resulting in an income tax rate of 2.56%. These rates can vary by town, influenced by local budget decisions and property valuations. In the 2024-2025 fiscal year, around 87% of Vermont towns increased their homestead education tax rates, with some towns seeing hikes over 30%.
Property Tax Credits
Vermont offers a Property Tax Credit to help eligible homeowners manage their property tax bills. To qualify, homeowners must meet certain household income requirements and have their property classified as a homestead. Filing a Homestead Declaration and Property Tax Credit Claim each year, usually by April 15, is necessary to receive this credit.
Exemptions
- Disabled Veterans: Veterans with a disability rating of 50% or higher, or those receiving specific pensions, may qualify for a property tax exemption. The exemption amount varies by town, ranging from $10,000 to $40,000, which reduces the home’s assessed value for tax purposes.
- Native American Tribes: Properties owned by recognized Native American tribes or their nonprofit organizations, used for tribal purposes and not leased for profit, are exempt from taxation.
Recent Legislative Changes
In 2024, the Vermont Legislature passed Act 183 (H.887), updating the education funding formula effective from the 2025-2026 property tax year, starting July 1, 2025. This act introduced a new Statewide Adjustment to set education property tax rates.
Breaking Down Your Property Tax Bill
Vermont property tax bills include both municipal and education tax rates:
- Municipal Rate: Set by your local government to cover community expenses.
- Education Tax Rates: Include homestead and nonhomestead rates determined by the state legislature annually.
Your total property tax is the sum of these rates applied to your property’s assessed value, adjusted by any credits or exemptions you qualify for. For the most accurate and personalized information, consult with local tax assessors or the Vermont Department of Taxes.
Property Tax Rates Across Vermont Counties
Vermont Property Tax Rates by County
County Name
Median Home Value: $
Median Annual Property Tax Payment: $
Effective Tax Rate: %
Comparing Vermont Property Taxes to Neighboring States
When compared to neighboring states like New Hampshire, Vermont generally offers more favorable property tax rates for residential homeowners. For example, Grafton County in New Hampshire has an effective property tax rate of 2.08%, slightly higher than Vermont’s average. However, the specific benefits depend on whether your property qualifies for the homestead tax rate. Overall, Vermont’s property tax structure, especially the homestead rate, provides a balanced approach to funding local education while maintaining fair tax assessments for homeowners.
County-Specific Insights
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Factors That Affect Vermont Property Taxes
- Assessed Value vs. Market Value: The Common Level of Appraisal (CLA) ensures property assessments are fair and reflect the market value.
- Educational Spending: Higher spending in local schools can increase the state education tax rate.
- Property Type: Primary residences benefit from lower tax rates compared to commercial or rental properties.
- Local Tax Rates: Each municipality sets its own property tax rate, affecting the overall tax burden.
Frequently Asked Questions (FAQs)
How are property taxes in Windsor County calculated?
In Windsor County, property taxes are based on the property’s assessed value and the effective tax rate. With the highest rate in the state at 2.13%, a property valued at $200,000 would incur an annual property tax of $4,260.
How do Vermont property taxes compare to those in New Hampshire and other neighboring states?
Vermont’s property taxes are generally more favorable for residential homeowners compared to neighboring states like New Hampshire. For example, Grafton County in New Hampshire has an effective property tax rate of 2.08%, slightly higher than Vermont’s average of 1.73%.
How do property tax rates vary across Vermont counties?
Property tax rates in Vermont vary significantly by county due to factors like median home values, educational spending, and local tax policies. For instance, Chittenden County has an effective rate of 2.03%, while Grand Isle County’s rate is 1.64%.
How can I calculate my property taxes in Vermont?
To calculate your property taxes in Vermont:
Find Your Assessed Value: Obtain this from your local assessor’s office or your latest property tax bill.
Identify Tax Rates: Determine the local property tax rate and the state education tax rate applicable to your property.
Calculate: Multiply your property’s assessed value by the combined effective tax rate. Alternatively, use an online calculator for an estimate.
How do property taxes in Washington County compare to the state average?
Property taxes in Washington County are slightly higher than Vermont’s state average. Homeowners here pay an average annual property tax of $4,724, with an effective rate of 2.05%, making it the third-highest in the state.
How do property taxes in Chittenden County compare to other counties in Vermont?
Chittenden County has some of the highest property taxes in Vermont, with a median annual payment of $6,376 and an effective rate of 2.03%. This rate is the highest in the state, significantly above the national average.
What factors affect the amount of property tax I owe in Vermont?
Several factors influence your property tax in Vermont:
Assessed Value: Determined by local listers based on market value.
Common Level of Appraisal (CLA): Ensures fair tax rates based on property appraisals.
Educational Spending: Higher spending can increase the state education tax rate.
Property Type: Residential homesteads benefit from lower tax rates compared to commercial properties.
How do property taxes in Windsor County compare to state and national averages?
Windsor County has the highest property tax rate in Vermont at 2.13%, significantly above the state average of 1.73% and the national average of 0.99%.
How do property taxes in Addison County compare to other counties in Vermont?
Addison County has an average effective property tax rate of 1.86%, which is moderate compared to other Vermont counties. With a median home value of $257,100 and a median annual tax payment of $4,778, Addison County offers a balance between tax obligations and favorable property values.
How do property tax rates in Windham County compare to other counties in Vermont?
Windham County has an effective property tax rate of 2.06%, making it the second-highest in Vermont. With a median home value of $217,600 and a median annual property tax payment of $4,476, homeowners in Windham County face a significant tax burden compared to other regions.
How does Orange County’s property tax rate compare to other counties in Vermont?
Orange County has an average effective property tax rate of 1.99%, ranking it as the fifth-highest in Vermont. Despite its smaller population of just under 30,000, Orange County imposes a considerable tax rate, resulting in an annual property tax payment of approximately $3,980 for a $200,000 home.
Comparing Vermont Property Taxes to Neighboring States
Vermont’s property tax rates are competitive when compared to neighboring states, particularly New Hampshire. Both states have higher property taxes compared to the national average, but Vermont’s homestead tax rate offers a slight advantage for primary homeowners. For example, New Hampshire’s Grafton County has an effective property tax rate of 2.08%, slightly higher than Vermont’s state average. This advantage makes Vermont an attractive option for homeowners who qualify for the homestead tax rate and seek lower property tax obligations compared to similar regions.
Additional Considerations
When managing your property taxes in Vermont, keep these tips in mind:
- Regular Reappraisals: Ensure your property’s assessed value is accurate. If it falls below 80% of the market value, a reappraisal is required.
- Stay Updated: Property tax rates and assessed values can change annually. Regularly review your tax bills and local tax rate adjustments.
- Seek Professional Help: Consider consulting with a tax advisor to navigate Vermont’s property tax system effectively.
Conclusion
Vermont’s property tax system combines local and state levies to fund essential services like education. Understanding how these taxes are calculated, the variations across counties, and how Vermont compares to neighboring states is crucial for homeowners and prospective buyers. By staying informed and utilizing available resources, you can manage your property tax obligations effectively and make informed real estate decision
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Disclaimer: This post is for informational purposes only and does not provide legal, tax, or financial advice. Laws, regulations, and tax rates can change often and vary significantly by state and locality. This communication is not intended to be a solicitation, and XOA TAX does not provide legal advice. XOA TAX does not assume any obligation to update or revise the information to reflect changes in laws, regulations, or other factors. For further guidance, refer to IRS Circular 230. Please consult a professional advisor for advice specific to your situation.
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