Property Tax Exemptions You're Probably Not Claiming in Vermont

Vermont doesn't hand homeowners a flat dollar exemption. What it has instead is a filing nearly every homeowner needs to make every single year just to get the lower tax rate, plus a separate income-based credit that can be worth thousands more on top, and a real penalty if you miss the first one.

The filing that isn't optional, and isn't one-time

Every Vermont resident who owns and occupies a home has to file a Homestead Declaration (Form HS-122) each year, by April 1, to be taxed at the lower homestead education rate instead of the higher non-residential rate. This isn't a one-time filing that carries forward automatically the way it works in a lot of states. You file it fresh every year, and if you miss the deadline, your municipality can assess a penalty of up to 8% of the education tax owed. This one is worth treating as a genuine annual task, not something to file once and forget.

The credit that can be worth thousands more

Filed at the same time as the Declaration, the Vermont Property Tax Credit reduces what you actually owe based on household income, calculated on Schedule HI-144 using income from everyone in the household, including children. The maximum credit is $5,600 against the education portion of your tax and $2,400 against the municipal portion, up to $8,000 total. The income ceiling for 2025 was $115,400, high enough that this isn't a narrow, low-income-only program the way similar credits work in many other states; it reaches a broad slice of Vermont homeowners. You have to have filed a timely Homestead Declaration to claim it, and you're limited to one claim per household per year.

The one for disabled veterans

Veterans with a service-connected disability rating of 50% or higher can exempt $10,000 of their home's assessed value, and veterans rated 100% disabled can exempt up to $40,000. File with the Vermont Department of Taxes using Form HS-122, along with your DD-214 and VA disability rating documentation. Vermont also runs a separate, newer VT Veteran Tax Credit on the income tax side, alongside credits like the Earned Income Tax Credit and Child Tax Credit; if you're a veteran, it's worth asking the Department of Taxes what that credit is currently worth, since it's a distinct benefit from the property tax exemption above.

What to actually check

File your Homestead Declaration every year by April 1, regardless of your income; it affects your tax rate whether or not you also qualify for the credit. Separately, check whether your household income falls under the Property Tax Credit's ceiling, since it reaches further up the income scale than people often assume. And if you're a veteran, confirm the current exemption tier for your disability rating with the Department of Taxes directly, along with whether the newer income tax credit applies to you.