Vermont’s education funding system is undergoing major changes in the 2025 legislative session after years of rising property taxes and a debate over school funding. The state pays for education on a statewide basis, pooling property taxes from across the state and redistributing them. School district budgets are voted on locally and impact tax rates statewide.
Two-thirds of the state’s education budget is paid for with property taxes, with the remainder coming from sales tax, lottery proceeds, and federal and state Medicaid money. The Legislature passes the “yield bill” to set property tax rates for voter-approved budgets in each district. Homestead and non-homestead property taxes are set based on school spending decisions and adjusted for student weights.
Homestead property tax rates fluctuate based on per-pupil spending, and income-sensitized taxpayers receive discounts. The common level of appraisal, set by the state, also affects property tax rates. Starting in July 2025, the appraisal level will reflect the town’s property values compared to the statewide average.
Vermont’s education funding system is complex and unique, with resources available to understand the methodology. Lawmakers are considering changes to address rising property taxes and make the system more transparent for residents.
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