Earlier this week the Vermont Tax Commissioner sent out the annual letter from the administration to state legislative leaders recommending rates for the FY 2020/2021 homestead property tax and the non-homestead rate.
Both these rates provide significant revenue for the Education Fund. The Ed Fund for FY 2020/21 must contain approximately $1.7 billion to meet pre-K through grade 12 school costs for the year. It is the biggest of all Vermont state funds.
Homestead property generates $447million (25%) for the Education Fund . The Homestead rate, also called the yield, is the only revenue source within the Education Fund affected by local decisions. By definition, Homestead property contains a primary residence.
The Non-homestead rate generates $694 million (41%) for the Education Fund. This rate reflects statewide spending and is set by the legislature. Non-homestead rate used to be called Non-resident rate, but in fact many Vermont residents pay this tax on property they own.
About 30% of Vermont property is exempt from school property tax.
Other revenue sources going into the Education Fund are:
*100% of the Sales and Use tax, $436 million
*33% of the Vehicle Purchase and Use tax, $36 million
*25% of the Rooms/Meals tax and Alcohol tax, $48 million
*100% of the lottery earnings $29 million.
Nothing is simple about the Vermont Education Fund, but this quick summary of revenues used to fill up the Education Fund may be helpful. Watch for a letter coming soon on how all this money is spent.