School Taxes Based on Income, 2011
Since 1998, Vermont residents have had two options for calculating the school taxes on their primary residence. They may base their payment either on the value of their home or on their household income, whichever is less. Over the years, the Legislature has limited eligibility for paying based on income.1
But most Vermonters still tie some or all of their school taxes to household income.
The map shows the 2011 income-based school tax rates in each town.
All school taxes in Vermont are state taxes and go to the state Education Fund, even though local voters in each town determine the tax rates on primary residences. Both the residential property tax rate and the income-based rate vary from town to town depending on how much the community votes to spend, per pupil, on its schools. Both rates are the same in any two towns with the same per-pupil spending. Non-residential property, such as businesses and second homes, is taxed at a uniform statewide rate set by the Legislature.
In 2010, almost 110,000 Vermont households—60 percent—paid their school taxes based on their income. In 2011, which covers the 2011-2012 school year, the income-based school tax rates range from 1.80 percent of household income to 3.46 percent.
Property tax rates by town can be found at the Vermont Tax Department website. The site lists both the equalized tax rate, which is the rate assuming all property is assessed at 100 percent of fair market value, and the rates that appear on local property tax bills, which are based on the current, locally assessed value.
Despite regular promises to simplify Vermont’s school funding system, recent changes to the law, Act 68, have only complicated it. A simpler—and fairer—way to fund schools would be to eliminate the school property tax for residences and have all residents pay based on income, as most do now, with rates continuing to be set by each town according to its per-pupil spending.
Data source: Vermont Department of Taxes
- For example, regardless of income, all resident homeowners must pay property taxes on land beyond two acres surrounding their home. Residents with household income less than $90,000 who choose to pay the income-based tax must also pay property taxes on their home value in excess of $500,000. Those with incomes of $90,000 or more must pay property taxes on home value in excess of $200,000. [↩]
