Disabled Veteran Property Tax Exemption in Vermont (2026)

Last reviewed August 26, 2026. Every figure, form and deadline on this page is re-checked against the state’s own government sources once a quarter, and the date above is updated when we do it.

Vermont’s disabled veteran property tax exemption lowers the taxable value of your home by at least $10,000, and by as much as $40,000 in towns that have voted to raise it. You qualify with a VA disability rating of 50 percent or higher, a VA pension, or a permanent medical military retirement. There is no 100 percent requirement. You apply through the Vermont Office of Veterans Affairs, not the town, and the application is due by May 1 every year.

Because the exemption amount is set town by town above the $10,000 floor, the dollar value of it depends on where in Vermont you buy. Further down I show you how to find your town’s amount and what it is likely worth on a real tax bill.

How much is the Vermont exemption worth?

Exemption level	Reduction in assessed value
State-mandated minimum, every Vermont town	$10,000
Town-voted maximum, where local voters have approved it	up to $40,000

Vermont does not scale this exemption by disability percentage the way some states do. Once you clear the 50 percent threshold, or qualify on pension or medical retirement grounds, you get your town’s full exemption amount. There is no bigger tier for a 100 percent or permanent and total rating under this particular program.

The exemption works as a reduction in assessed value, not a check or a capped credit. A home appraised at $200,000 in a town with the $20,000 exemption is billed as if it were worth $180,000. Both the $10,000 floor and any town-voted increase apply against your municipal grand list and your education grand list, so the reduction lowers both halves of your bill, not just one. Towns that vote for an amount above $10,000 have to pay the state back for the education tax revenue that increase gives up, which is one reason many towns stay at or near the floor.

What that is worth in dollars depends on your town’s combined tax rate. Statewide, the Vermont Department of Taxes projected the average actual homestead education property tax rate at $1.56 per $100 of value for the tax year that started July 1, 2025, rising to an estimated $1.74 for the following year. That is the education portion only. Add your town’s municipal rate and a $10,000 exemption is commonly worth somewhere in the low hundreds of dollars a year, more in a town that has voted the exemption up to $40,000 and more again in a high-tax-rate town. Your town lister or assessor can tell you the exact figure, and the Department of Taxes publishes town-by-town education tax rate tables you can check yourself.

Confirm your town’s exemption amount before you assume $10,000

Because a majority of Vermont’s roughly 250 towns and cities can vote to raise the exemption, quoting a single statewide number is misleading. Some national veteran-benefit summaries print only the $10,000 floor and stop there, which understates what a veteran in a town that has voted the full $40,000 actually receives. Ask your town clerk or lister whether your town has voted an increase before you plan around a specific number.

Who qualifies in Vermont?

To claim Vermont’s disabled veteran property tax exemption you need to be a veteran, spouse, surviving spouse or dependent who meets one of these, according to the Vermont Office of Veterans Affairs:

• Disability Compensation at a VA rating of 50 percent or higher, or
• VA Non-Service Connected Pension, also called Improved Pension or Widower’s Pension, or
• Permanent medical military retirement pay.

The exemption applies only to a home the veteran or survivor owns and occupies as a primary residence. If you rent your home out, you cannot pass the exemption on to your landlord, and the landlord cannot claim it on your behalf.

No 100 percent requirement, and no percentage-based tiers

Vermont’s 50 percent threshold is unusually low compared with many states that require a full 100 percent or permanent and total rating for any homestead-style property tax break. But Vermont also does not scale the benefit upward for higher ratings the way some tiered states do. A veteran rated 50 percent and a veteran rated 100 percent in the same town receive the identical dollar exemption.

Surviving spouses and dependents

The exemption is available to unremarried surviving spouses and minor children of a veteran who met the eligibility criteria at the time of death. Surviving spouses may also separately be eligible for Dependency and Indemnity Compensation or Death Pension from the VA, which is a different federal benefit from this state property tax program.

Can the exemption be used before closing?

In Vermont, only if the exemption is already approved for that tax year. The application goes to the Vermont Office of Veterans Affairs, not the town, and it is due by May 1 for the tax year that runs from that July through the following June. There is no provision that lets a veteran buying a home mid-year claim the exemption retroactively for a year that already had its May 1 deadline pass, and the exemption does not transfer from a seller who had it to a buyer who does not file a fresh application.

Four states put a pre-purchase determination in the statute. Vermont is not one of them

State rule. Four states let a qualifying veteran get something in writing from the taxing authority before they own the home:

• Virginia: file the normal exemption paperwork plus documentation of the purchase agreement and the commissioner of the revenue must process it and send an approval or denial letter, with the exemption amount, within 20 business days. Va. Code § 58.1-3219.6(B). The exemption itself takes effect only after you become the owner.
• Maryland: you may apply for a specific dwelling you intend to purchase, and the Department of Assessments and Taxation must send a preliminary approval or denial, with the amount, within 15 business days. Md. Code, Tax-Property § 7-208(d)(5). No second application is needed once you own it.
• Utah: a qualifying disabled veteran claimant may apply before owning the residence with a real estate purchase contract, filed in the county where the home sits, and the county must send a receipt with preliminary approval or denial and the calculated amount within 15 business days. Utah Code § 59-2a-502(5).
• Alabama: for closings on or after October 1, 2026, the tax assessing official issues a tentative certificate of permanent and total disability before purchase, within 20 days, and the statute says a settlement agent or loan closing officer may not consider the homestead ad valorem taxes when calculating debt-to-income once you hand over that certificate. Ala. Code § 40-9-21.3.

One correction worth having, because it gets repeated a lot: outside of Alabama these laws bind the county or the state tax office, not your lender. They force the taxing authority to answer you in writing before closing. They do not order a lender to waive or exclude the tax. Alabama is the only one of the four that reaches into the loan file itself. North Carolina has a bill that would add a prequalification process, House Bill 94, which passed the House 112 to 0 in May 2025 and has sat in Senate Rules since. It is not law, so do not plan around it.

In Vermont it is a lender decision, so shop it

Lender overlay and market practice. There is no Vermont statute telling the taxing authority to pre-approve you before you own the home, so whether this benefit helps you qualify comes down to lender policy. Here is what that looks like in practice, from lender guidance we collected directly in August 2026:

• Some lenders will use the reduced tax figure before closing, and some will not. One wholesale lender told us plainly it will consider a veteran real estate tax exemption and a reduced property tax number in the qualifying payment, as long as underwriting gets the local exemption rules and proof you meet them. If the documentation is short, underwriting uses the full tax amount instead. Another wholesaler checks it state by state and county by county on every single closing. If your lender says no, that is not the final answer on the benefit. It is that lender’s answer. Ask another one.
• Every lender will require proof of eligibility if the lower tax is doing work in your file. If the reduced tax is what lowers your debt ratio or raises your residual income, expect to document it: your VA rating decision or award letter showing the qualifying disability, the taxing authority’s own published exemption rules, and usually the completed exemption application. One lender’s VA guide requires proof of 100 percent disability from VA plus a copy of the completed county application for property tax exemption, and where the application has to be notarized it takes an unsigned copy up front and conditions it to be signed at closing.

Lender overlays apply everywhere. State permission is not lender permission. One large investor allows the anticipated reduced tax for qualifying only for primary residences in California, Florida, Maryland, Texas, Utah and Virginia, and only with proof the veteran applied to the taxing authority before the note date. Vermont is not on that list.

Practically, ask your loan officer two questions before you write an offer: will you use a reduced tax figure to qualify me, and will you waive the tax escrow. Different lenders give different answers on the same file, and that is normal, not a mistake.

What we can do instead: waive the escrow

If the exemption cannot be counted yet, the fallback is to not escrow the taxes at all, so your monthly housing expense is not carrying twelve months of a tax bill that is about to shrink. VA does not require escrows, so this is a lender and investor decision, and many will allow it on a strong file. There are lenders that will waive the tax escrow on a VA loan even when the property taxes have not been waived yet, so this is a real option and not a rare favor. Some will waive it with no restrictions at all, others want the eligibility proof and the correct paperwork in the file first. Waiving escrow does not require the taxing authority to approve anything, which is why it is usually the easier ask of the two. Understand the tradeoff: with no escrow account, you pay the taxing authority directly and you are on your own for those tax bills until the exemption is actually approved, and approval can take a while. Budget for it and pay the bill on time; a delinquent tax bill on a home you just bought is an expensive way to save a few dollars of monthly payment.

One more VA rule to know, because it runs the other way. On estimating taxes, Chapter 4 says “If taxes are expected to increase, use the increased amount.” There is no matching VA instruction that lets an underwriter write down your taxes, which is why the reduction is always a lender option and never a VA entitlement. The Chapter 4 text is here if you want to read it.

Plan for the gap between closing and approval

These applications take a while to process, and the taxing authority’s calendar does not wait for your loan. A tax bill can come due between your closing date and the day your exemption is approved, and you are the owner, so that bill is yours. That can include taxes attributable to the period the prior owner held the home. One lender’s VA guide makes it explicit and requires a signed letter of explanation from the veteran borrower stating they are solely responsible for the property taxes owed for the prior owner. Keep the money set aside and do not assume the first bill will be reduced, especially if you waived escrow and Vermont is billing you directly.

How to apply in Vermont, step by step

1. Get your VA Summary of Benefits Letter before May 1 each year. Download it from VA.gov, visit the VA Regional Benefits Office at 163 Veterans Dr., White River Junction, or call 800-827-1000. Order it early; the Vermont Office of Veterans Affairs recommends calling by April 1 so the letter arrives in time.
2. Complete the Disabled Veteran and Surviving Spouse Property Tax Exemption application, available from the Vermont Office of Veterans Affairs (PDF download).
3. Send both documents together to the Vermont Office of Veterans Affairs, 118 State Street, Montpelier, VT 05620-4401. Do not send them to your town lister or assessor; this exemption is administered at the state level, unlike your general homestead declaration.
4. Watch the deadline: all applications must be received before May 1 for that tax year. Veterans determined to be totally and permanently disabled only have to submit their proof of disability to the state once, but the Vermont Department of Taxes says the exemption application itself still has to be filed every year.
5. If you miss May 1, you can apply to your town’s Board of Abatement directly for abatement of municipal and education taxes if you get the claim in before October 1. The Board can grant it for sickness, disability or other good cause, but it may reduce the amount.

For general property tax questions that go through your town rather than the state, such as your homestead declaration or a question about your assessment, Vermont’s Department of Taxes maintains a statewide district advisor directory by town, so you are never stuck guessing who to call.

What if you miss the May 1 deadline?

Vermont’s path for a missed deadline is abatement, not a multi-year refund window. If the Office of Veterans Affairs receives your application after May 1 but before October 1, you can take your claim directly to your town’s Board of Abatement under 24 V.S.A. § 1535(a)(6). If the late filing is due to sickness, disability, or other good cause the Board accepts, it may grant the exemption for that year, though the Board can reduce what it awards.

There is no statutory provision described by the state for reopening several prior tax years the way some states allow. If you believe you should have qualified in an earlier year and never applied, call the Vermont Office of Veterans Affairs at 802-828-3379 or the Department of Taxes Taxpayer Advocate at 802-828-5282 to ask what options exist for your specific situation, since abatement decisions are made town by town.

Other Vermont programs for disabled veterans

The property tax exemption is the main one for homeowners, but Vermont runs a few other programs worth knowing about. All of these are state programs unless labeled otherwise.

• Vermont Veteran Tax Credit (state income tax). Created by Act 71 of 2025 and effective starting with the 2025 tax year, this is a refundable $250 state income tax credit for any Vermont resident or part-year resident veteran with a discharge record whose adjusted gross income is $25,000 or less. The $250 phases down for AGI between $25,000 and $30,000, and there is no credit above $30,000. Two veterans married to each other filing jointly can both claim it if their combined AGI is under $30,000. This is separate from the property tax exemption and is claimed on your income tax return, not through the Office of Veterans Affairs. Vermont Department of Taxes, military and veterans page.
• Military retirement pay exemption (state income tax). Act 71 of 2025 also excludes military retirement pay from Vermont taxable income, subject to your federal adjusted gross income. You can only elect either the Social Security exemption or the military retirement pay exemption for a given year, not both. Vermont Office of Veterans Affairs.
• Property Tax Credit (state, income-based, all homeowners). A separate, income-tested program open to any Vermont homeowner, not just veterans, that pays a portion of your property tax bill based on household income. Filed on Form HS-122 and Schedule HI-144 by April 15. Veterans can and should apply for both this credit and the disabled veteran exemption if they qualify for both. Vermont Dept. of Taxes, Property Tax Assistance for Veterans (PDF download).
• Adapting a home for a service-connected disability (federal). The VA’s Specially Adapted Housing and Special Home Adaptation grants pay to build or modify a home for certain service-connected disabilities, and HISA grants cover smaller medical improvements. Those are federal VA benefits, not Vermont programs, and they can be used together with a VA loan on a Vermont home.
• Vermont Veterans’ Home and county-level help. The Vermont Office of Veterans Affairs also runs services like Veterans Service Officers for claims help and the Vermont Veterans Fund for emergency financial assistance. If money is tight, call the Office of Veterans Affairs at 802-828-3379 before you assume nothing is available.

Vermont disabled veteran property tax FAQs

How much is Vermont’s disabled veteran property tax exemption worth?

State law sets a minimum of $10,000 off your home’s appraised value for tax purposes. Any Vermont town can vote to raise that to as much as $40,000. Both amounts apply against your municipal and education grand list, so the exemption reduces both parts of your bill.

Do I need a 100 percent VA rating to qualify in Vermont?

No. Vermont’s threshold is a disability rating of 50 percent or higher. You also qualify with a VA Non-Service Connected Pension, sometimes called Improved Pension or Widower’s Pension, or a permanent medical military retirement. There is no separate, larger tier for 100 percent or P&T veterans under this program.

What is the deadline to apply in Vermont?

All applications must reach the Vermont Office of Veterans Affairs by May 1 for that tax year. Miss it and you can still ask your town’s Board of Abatement directly for relief if you apply before October 1 and have a good cause, such as sickness or disability, but the Board can reduce what it grants.

Do I have to reapply every year?

Yes. The Vermont Department of Taxes says the application must be submitted every year to maintain the exemption, since your VA Summary of Benefits Letter is part of the filing. The state’s Office of Veterans Affairs also notes that veterans rated totally and permanently disabled only need to send proof of that rating one time, but the annual application itself still has to go in.

Can a surviving spouse keep the Vermont exemption?

Yes. Unmarried surviving spouses and minor children of a veteran who met the eligibility criteria at the time of death can receive the same exemption.

Can I use the exemption on a home I am buying this year?

Only if you already have an approved application on file for that town and tax year by May 1. Vermont’s exemption is not automatic and is not transferred from a seller, so a purchase after the deadline generally cannot use it until the following tax year. Ask the seller’s town lister whether the seller had the exemption, because it does not carry over to you.

Is there a separate credit for lower-income veterans in Vermont?

Yes, but it is an income tax credit, not a property tax break. The Vermont Veteran Tax Credit, created by Act 71 of 2025, pays a refundable $250 to veterans with adjusted gross income at or below $25,000, phasing out completely at $30,000. You claim it on your Vermont income tax return, separately from the property tax exemption.

Where to go next

• Disabled Veteran Property Tax Exemption Guide, every state’s exemption, form and deadline in one directory
• The complete guide to VA home loans
• Funding Fee Waivers and Refunds Guide, the fee is waived outright at a 10 percent rating or higher, and can be refunded if you already paid it
• Property tax discounts for veterans on VA disability, the national overview
• Vermont Department of Taxes, Property Tax Exemptions page, with current amounts and rules