Vermont's property tax system is structurally different from almost every other state's. Rather than a simple county-and-municipal split, the largest share of a Vermont property tax bill is an education property tax set through a statewide yield formula tied directly to local school district spending, then adjusted for each town using its Common Level of Appraisal (CLA) — a measure of how close local assessments are to true market value. Layered on top is a separate municipal tax for town government services. The result is a statewide average effective rate of approximately 1.42%–1.51% of home value (SmartAsset: 1.42%, with a $5,026 median annual bill; Tax Foundation: 1.51%) — the sixth-highest or higher nationally depending on the measure used.
This guide explains how Vermont's homestead and nonhomestead education tax rates work, how the CLA equalizes assessments across 255 municipalities with wildly different local appraisal practices, how the Property Tax Credit (Form HS-122) provides income-based relief, what Act 73's school funding overhaul means for future bills, how rates compare across major counties, and a worked example for a home in Chittenden County.
Every Vermont property is classified as either a homestead (an owner's primary residence, declared annually via Form HS-122) or nonhomestead (rental property, second homes, vacant land, and commercial property). Each class has its own statewide education tax rate calculation.
The nonhomestead education tax rate is set as a single statewide base rate each year by the Commissioner of Taxes. For FY2026 (the property tax year running July 2025–June 2026), the Commissioner's December 1, 2024 letter set the base nonhomestead rate at $1.643 per $100 of equalized education property value.
The homestead rate works differently: it's driven by a yield — the amount of per-pupil education spending that a $1.00 base tax rate (per $100 of value) is expected to support. For FY2026, the homestead yield was set at approximately $9,401 per pupil. A school district that spends more per pupil than the yield supports needs a proportionally higher local homestead rate; a district that spends less can set a lower rate. This is why homestead rates vary so much town to town — from a low of $0.7146 per $100 in Buels Gore to a high of $3.3006 per $100 in Killington for FY2026 — reflecting differences in local school district spending decisions voters approve at town meeting, not just property values.
The Commissioner's FY2026 letter projected education property tax bills to rise by a statewide average of 5.9%, reflecting continued growth in school spending statewide, though the actual change for any individual town depends on that town's specific voted budget and CLA adjustment.
Because Vermont's 255 towns and cities each maintain their own local property assessments — and none is required to reassess on a fixed statewide schedule — assessed values can drift meaningfully out of step with actual market value over time, especially in fast-appreciating markets. The Common Level of Appraisal (CLA) is the tool the state uses to keep education tax bills fair despite this drift.
Each year, the Department of Taxes' Division of Property Valuation and Review (PVR) compares a town's total listed (assessed) grand list value to actual sale prices of properties within that town, producing a ratio: the CLA. A town where assessed values equal 100% of a fair-market-value-based standard has a CLA of 100%. If a town's CLA has drifted to, say, 80% (properties are systematically underassessed relative to true value), the state's education tax rate calculation for that town is adjusted upward to compensate — so residents of under-assessed towns don't pay less than their fair share of the statewide education tax simply because local assessments are stale.
Under 32 V.S.A. § 4041a(b), if a municipality's Education Grand List CLA falls below 85% or above 115% — or if its coefficient of dispersion (a measure of assessment consistency within the town) exceeds 20% — the PVR Director must order the municipality to conduct a full property reappraisal. The municipality then has 30 days to contest the finding or submit a compliance plan. This is why many Vermont towns periodically undertake town-wide reappraisals: it's not optional once the CLA drifts too far out of range.
A town with a low CLA (badly out-of-date, under-assessed values) will show a higher stated tax rate per $100 to compensate — so comparing raw town tax rates without accounting for CLA can be misleading. The effective rate (actual tax paid divided by actual market value) is the more reliable comparison point, which is why this guide uses effective rates rather than raw nominal rates for the county comparison below.
Vermont's main relief mechanism for homeowners is the income-sensitized Property Tax Credit, claimed on Form HS-122 alongside the mandatory Homestead Declaration.
Vermont resident homeowners with household income up to $115,400 may qualify for a credit that reduces their property tax bill based on income rather than solely on property value. The credit is capped at $8,000 total, split between a maximum $5,600 for the education property tax portion and $2,400 for the municipal property tax portion. Both the Homestead Declaration and the Property Tax Credit Claim (filed together on Form HS-122, with the Household Income Schedule HI-144) are due April 15 each year, with a final late-filing deadline of October 15.
Filing Form HS-122 isn't just about claiming the income-based credit — it's what tells the town to apply the (typically lower) homestead education tax rate rather than the nonhomestead rate to a property. Homeowners who forget to file can be taxed at the higher nonhomestead rate until the declaration is filed and processed.
Act 73 of 2025 sets Vermont on a path toward a substantially different education funding and governance structure: larger, consolidated school districts, a new weighted student funding ("foundation") formula that allocates a base per-pupil amount adjusted by weights for student needs, and — eventually — a more uniform statewide education tax rate structure to replace the current town-by-town yield system. In 2026, a follow-up law (H.955) revised the implementation plan: it replaced state-forced district mergers with a voluntary consolidation approach, added a new tier of regional shared-service agreements, and pushed the funding formula's effective date from July 1, 2028 to July 1, 2030. Because this reform remains in a multi-year transition phase, the current homestead/nonhomestead yield system described above remains in effect for FY2026 and will continue to apply for several more tax years.
Because Vermont's tax rate is a town-level calculation (education rate adjusted by CLA, plus a separate municipal rate), effective rates vary meaningfully even within a single county. The figures below are approximate county-level effective rates (tax paid as a percentage of home value); treat them as directional, since your specific town's combined rate can differ from the county average.
| County | Approx. Effective Rate |
|---|---|
| Windsor | ~1.84% |
| Windham | ~1.81% |
| Rutland | ~1.81% |
| Washington | ~1.75% |
| Bennington | ~1.64% |
| Chittenden | ~1.37%–1.51% |
| Franklin | ~1.41% |
Chittenden County (Burlington and the surrounding Vermont's largest metro area) has the lowest effective rate on this list despite having the state's highest median dollar tax bill (around $6,469) — because home values there are substantially above the state average, similar to the pattern seen in high-value counties in other states. A lower effective rate applied to a higher home value can still produce the largest bill in dollar terms.
Rural counties like Windsor and Windham combine more moderate home values with school district spending levels that, per the yield formula described above, translate into higher homestead tax rates relative to the town's grand list value.
Chittenden County — home to Burlington, South Burlington, and Vermont's largest population center — is a useful case study since it has the state's highest median home values.
Using Chittenden County's approximate effective rate range of ~1.37%–1.51%:
$450,000 × 1.45% (midpoint) ≈ $6,525 per year
Vermont bills combine a municipal tax (funding town government) with the education property tax (funding schools, calculated via the homestead yield formula for a homestead property). In most Vermont towns, the education portion makes up roughly 60%–70% of the total combined rate, with municipal services making up the remainder. Applying that general split to the estimate above:
This split varies by town — some Chittenden County towns have unusually high municipal spending relative to their education budget, and vice versa — so it should be read as illustrative rather than exact.
If this household's income falls at or below $115,400, they could file Form HS-122 by April 15 and potentially reduce the bill by up to $8,000 (capped at $5,600 for the education portion and $2,400 for the municipal portion) — though actual credit amounts depend on the specific income-sensitivity calculation, which compares the bill to a percentage of household income, not a flat reduction.
The illustrative $6,525 figure is a reasonable planning number, but because Vermont's education tax rate depends on the specific town's CLA and locally voted school budget, actual bills for otherwise-identical homes in different Chittenden County towns can differ by hundreds or even a few thousand dollars. Check your specific town's current combined rate, published annually by the town clerk and the Department of Taxes, for an accurate figure.
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