Vermont Veteran Tax Exemptions 2026

Vermont does not tax VA disability compensation, so your monthly VA pay is completely off the table when it comes to state income taxes. The state also offers a property tax exemption for disabled veterans, with the amount depending on your rating tier. Vermont is a smaller state with higher property values in many towns, which makes the exemption worth more in real dollar terms than the headline number suggests. This page explains the tiers, who qualifies, and how to file through your town clerk.

Does Vermont tax VA disability income?

No. Vermont does not tax VA disability compensation. The state treats it the same way the federal government does, which means it is left off your taxable income entirely. Whether you are rated 10 percent or 100 percent, your VA disability pay is not taxed by Vermont.

Vermont property tax exemption for disabled veterans

$10K to $40K exemption. Tiered exemption by rating.

Vermont's property tax exemption applies to the assessed value of your primary residence and grows with your rating. Because Vermont property values tend to run high, even a modest exemption amount can translate to a meaningful reduction in what you actually owe each year.

What rating do you need in Vermont?

The size of your break depends on your combined VA rating. In Vermont, the break is tiered, so even a partial rating can lower your property tax bill, and the amount climbs as your rating climbs. Not sure what your combined rating works out to? Run it through our VA disability calculator first, and if you are aiming for the top tier, check whether you qualify for Permanent and Total status.

How to claim your Vermont exemption

1. Confirm your current combined rating and whether it is Permanent and Total. Your VA award letter shows both.
2. Gather your DD-214 and your VA disability award letter. Most Vermont offices ask for both.
3. Contact your county tax assessor for the property tax exemption, and the your state tax agency or Department of Veterans Affairs for the income side.
4. File before your county deadline. Many counties require you to apply once, then renew only if your rating changes.

Always confirm the current figures and deadlines with your county assessor and the Vermont Department of Veterans Affairs before you rely on them. Rules and dollar amounts change year to year.