$8,000 Vermont Property Tax Credit: Who Qualifies and How to Claim It?

Vermont recently established a new tax credit to help homeowners pay their property taxes. Eligible homeowners can receive up to $8,000 in Vermont property tax deductions. Homeowners whose property qualifies as a homestead and meet other eligibility requirements may receive a credit for the property taxes paid.

Vermont Property Tax Credit: Who Can Get It?

The amount of property tax deductions in Vermont varies depending on several factors, but the maximum deduction available is $8,000, including $5,600 for the education property tax portion and $2,400 for the municipal property tax portion.

To claim the Vermont property tax credit, eligible homeowners must apply by April 15, 2024, or a $15 late fee will apply if you apply after that. We will not accept any credit claims after October 15, 2024.

Not all property owners qualify for the Vermont property tax deduction; homeowners must meet the following requirements:

• Must have been domiciled in the state for the entire previous year.
• You must not be claimed as a dependent by anyone else.
• The property must qualify as a homestead, and the homeowner must file a homestead declaration for this year’s comprehensive list.
• The owner must own the property as his or her home as of April 1.

Apart from this, homeowners must also meet income requirements to qualify for the tax credit. For example, your household income must be $128,000 or less in 2023.

Rental property owners should note that they are not eligible for the tax credit unless they rent the property for less than 182 days.

How to apply

Vermont’s property tax credit is much-needed relief for homeowners with home prices expected to rise in 2024. The Vermont Department of Revenue estimates property tax rates will increase by about 18% in 2024.

This means that for every $100 in property value, the average home property tax rate could jump from $1.54 to $1.80 in fiscal year 2025. So, property taxes on a home worth $250,000 could increase by about $650.

Providing tax credits is a better use of surplus government funds than sending cash directly. Vermont recently reported a record $90 million surplus in education funding.

To claim the Vermont property tax deduction, property owners must file two forms: Form HS-122 (Homestead Return and Claim Property Tax Deduction) and Schedule HI-144 (Household Income). Homeowners can file their claims electronically when filing their Vermont income tax return.

Separately, those claiming the property tax deduction on their homestead return will have three years from the April filing deadline to amend their household income. However, the revised or changed household income must be the same as reported on Schedule HI-144.

For more information about property tax deductions, visit the Vermont State Government website.