An act relating to excluding military disability retirement from personal income taxation

This bill would exclude military disability retirement income from Vermont's state income tax. It also clarifies how other military retirement and survivor benefits are taxed, with full exclusion for those earning $125,000 or less, a partial exclusion for those earning between $125,000 and $175,000, and no exclusion for those earning $175,000 or more. If passed, these changes would apply retroactively to January 1, 2026.

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