New Vermont Law Reduces Personal Income Taxes by $5 Million for Social Security Recipients | WPN World People News

Nearly 40,000 Vermonters receiving Social Security benefits will keep more of their income due to an income tax exemption proposed by Gov. Phil Scott and passed by the Legislature. This change, included in Act 11 of the 2018 Special Session, creates a personal income tax exemption for Social Security beneficiaries below certain income thresholds. The law takes effect in calendar year 2018 for tax returns filed in 2019.

“This relief, coupled with our Working Family Taxpayer Protection Act, provides $30 million in income tax relief for Vermonters,” said Scott. “For folks on a fixed income, these savings each year will make a difference. But, we have more work to do to seek tax relief and make Vermont more affordable for retirees and all Vermonters.”

“The governor and the department are proud to have worked with the Vermont legislature on an initiative that will help many Vermonters keep more of their Social Security benefits,” said Kaj Samsom, Commissioner of Taxes. “With this change, Vermont joins the overwhelming majority of states, including all of our neighbors in the Northeast, in granting additional state-level exemptions to Social Security income, which is taxed federally.”

At the federal level, Social Security benefit exemptions range from fully exempt to 15 percent exempt, depending on income. Benefits that are federally taxable become part of a taxpayer’s Adjusted Gross Income (AGI). The new Vermont tax exemption allows eligible taxpayers to exempt all or some of these federally taxable Social Security benefits on their Vermont returns.

The new Vermont exemption will save Social Security beneficiaries approximately $5 million in tax year 2018 and applies to all types of Social Security income that are taxable at the federal level, including retirement, disability and survivor benefits. Being able to take the exemption depends on the taxpayer’s filing status and level of income or AGI. For single, heads of household, married filing separate, and surviving spouse filers, Social Security benefits will be fully exempt if their AGI is less than $45,000 and partially exempt if their AGI is between $45,000-$55,000. For married joint filers, Social Security benefits will be fully exempt if their AGI is less than $60,000 and partially exempt if their AGI is between $60,000-$70,000.

Source:Vermont Official State Website