What Is the Income Threshold for Vermont's Veteran Property Tax Exemption?

Vermont offers veterans a property tax exemption on their primary residence, but the amount you receive depends on your household income. If your income stays below a certain level, you qualify for the full exemption. If it goes above that threshold, the exemption shrinks and once your income is high enough, the exemption phases out entirely.

For the 2024 tax year, the income threshold for the full veteran property tax exemption is $51,200 in household income for a single veteran. For married veterans filing jointly, the threshold is higher. As income rises above that figure, the exemption amount decreases on a sliding scale until it reaches zero.

You can find the official current-year thresholds on the Vermont Department of Taxes website.

How Does the Exemption Amount Change Based on Income?

Vermont doesn't just check whether you're above or below the threshold. It uses a graduated phase-out. Think of it like a sliding scale:

• Below the threshold: You receive the full exemption amount for your veteran category.
• Slightly above the threshold: Your exemption is reduced proportionally.
• Well above the threshold: The exemption is eliminated entirely.

The exact phase-out math depends on your veteran status category and filing year. The Vermont Department of Taxes publishes a worksheet each year so you can calculate your specific exemption.

What Counts as Income for This Exemption?

This is where many veterans run into confusion. Vermont uses a specific definition of income for this exemption that does not match your federal adjusted gross income exactly. The state defines "household income" broadly. It typically includes:

• Wages and salaries
• Social Security benefits (including SSDI and SSI)
• Pension and retirement income
• Interest and dividends
• Capital gains
• Unemployment compensation
• Workers' compensation
• Alimony received

The key thing to watch: VA disability compensation is excluded from household income for this calculation. That's an important detail because many veterans assume all their income counts. It doesn't. Your VA disability pay is not part of the equation.

Who Qualifies for Vermont's Veteran Property Tax Exemption?

To be eligible, you generally need to meet all of these conditions:

• You are a Vermont resident
• You own and occupy the property as your primary residence (homestead)
• You served on active duty during a recognized wartime period
• You were not dishonorably discharged
• Your household income falls within the eligible range

The wartime periods Vermont recognizes include World War II, the Korean War, the Vietnam War, the Gulf War (Desert Storm), and the ongoing period of conflict after September 11, 2001.

What About Veterans With Disabilities?

Vermont provides a larger exemption for veterans with service-connected disabilities. A veteran rated 50% or more disabled by the VA may qualify for a higher base exemption up to $40,000 off the assessed value of their home. Totally disabled veterans (100% rating) receive the maximum exemption.

The income threshold still applies, but starting from a higher base exemption means more veterans with disabilities keep a meaningful benefit even as their income rises. If you're comparing how other states handle disability-based exemptions, our article on Maine's disability-based veteran property tax exemption shows how differently each state structures these programs.

How Do You Apply for the Exemption?

You apply through your local town or city listers (the officials who handle property assessments in Vermont). The application process works like this:

1. Get the veteran exemption application form from your town clerk's office or the Vermont Department of Taxes website.
2. Complete the form, including documentation of your military service (DD-214) and your household income.
3. Submit the form to your town listers by the April 1 filing deadline for the tax year.
4. The listers review your application and adjust your homestead property tax accordingly.

If you miss the April 1 deadline, you may be able to file a late application by April 25, but there are no guarantees. Filing early avoids the risk.

What Are the Most Common Mistakes?

Not filing the application at all. Vermont does not automatically apply this exemption. Even if you qualified last year, you need to refile because your income may have changed. Some towns send reminders, but many do not.

Using the wrong income figure. Veterans sometimes report their federal AGI instead of the broader household income definition Vermont requires. Double-check the worksheet.

Forgetting to include a spouse's income. If you're married and living together, your spouse's income counts toward the household total even if the property is only in your name.

Assuming VA disability pay counts against you. It doesn't. Many veterans miss out because they think their total VA compensation pushes them over the limit when it actually doesn't.

Missing the deadline. The April 1 deadline is firm in most cases. Mark it on your calendar now.

How Does Vermont Compare to Other States?

Vermont's income-based approach is less common than states that offer flat exemptions regardless of income. For example, New Mexico's combat veteran exemption has a different structure that doesn't use the same kind of income phase-out.

If you're wondering whether an exemption or a tax credit would benefit you more, the distinction matters. Our breakdown of exemptions versus tax credits explains how each one affects your actual tax bill differently.

Some veterans who relocate may also want to know about vehicle registration tax exemptions by state as part of comparing total tax benefits.

What If Your Income Changes Mid-Year?

Vermont bases the exemption on your income for the calendar year prior to the tax year. So for your 2025 property taxes, the income threshold applies to your 2024 income. If you retired in late 2024 and your income dropped significantly, that lower income is what counts for the 2025 exemption but you still need to file by the deadline with documentation.

Can You Get This Exemption on a Second Home or Rental Property?

No. The exemption applies only to your primary residence (homestead). If you own multiple properties, only the one you actually live in qualifies. Vermont verifies homestead status through its property tax adjustment system.

Quick Checklist Before You File

• ✅ Gather your DD-214 or proof of wartime service
• ✅ Calculate your total household income using Vermont's definition (exclude VA disability compensation)
• ✅ Check the current year's income threshold on the Vermont Department of Taxes site
• ✅ Get the application form from your town listers or the state website
• ✅ File by April 1 don't wait
• ✅ Ask your town listers if you have questions about what counts as income

Next step: Pull together last year's income documents and your DD-214 this week. If you don't have a copy of your DD-214, you can request one through the National Archives eVetRecs system. Getting the paperwork together early means you won't scramble when the April deadline approaches.