Vermont Disabled Veteran Property Tax Exemptions in 2026

The grand list is the official record of all taxable property values in a Vermont municipality. When the exemption reduces your property’s appraised value on the grand list, every tax levy calculated from that value decreases proportionally. This is how a $40,000 reduction in appraised value produces roughly $692 in annual savings at the statewide average effective rate. For a deeper look at how property tax exemptions work with disability ratings, see the national overview. [1] [2]

TDIU and the Vermont Exemption

If the VA compensates you at the 50% rate or higher through Total Disability based on Individual Unemployability (TDIU), you should qualify. The statute references disability compensation at 50% or greater from the VA. Have the Vermont Office of Veterans Affairs review your specific VA documentation to confirm. [1] [4]

The examples above use the statewide average effective rate of approximately 1.73% as an illustrative figure. Your actual tax rate depends on your municipality’s education tax rate, municipal tax rate, and any special assessments. Rates above 2.0% are common in Vermont and would produce higher dollar savings from the same exemption amount. [3]

Vermont has no major active-duty Military installations. The Vermont National Guard operates out of Camp Johnson in Colchester (Chittenden County) and other armories statewide. Most Veterans in Vermont are Guard members, retirees, or Veterans who chose the state for retirement or relocation. [2]

The VA Funding Fee Is a Separate Benefit

The federal VA funding fee exemption is independent of Vermont’s property tax exemption. Certain disability-compensation recipients do not pay the one-time VA funding fee. For a first-use purchase with less than 5% down, the funding fee is 2.15% of the loan amount. On a $325,000 loan, that equals $6,988 if the fee applies. Veterans at 50% to 90% disability qualify for the Vermont property tax exemption but still pay the funding fee unless they receive VA compensation. Veterans at 100% P&T receive both benefits. [5]

Escrow Adjustment After Approval

If you close before the exemption is approved, your lender will escrow for the full tax amount. Once the exemption is applied and reflected in your actual tax bill, request an escrow re-analysis. Your monthly payment will decrease. The servicer is not required to automatically reanalyze when an estimated exemption is pending; the exemption must be reflected in the assessed tax obligation. [6]

This is a significant advantage over many states. Some states tie the surviving spouse benefit to active receipt of DIC or require separate application and additional qualification. Vermont’s provision is straightforward: the exemption continues for the unremarried surviving spouse as long as they own and occupy the property, with no additional VA benefit requirement. [1]

Each state administers its benefit differently. Vermont’s 50% threshold is among the most accessible, but the partial value reduction means higher-rated Veterans do not receive proportionally greater savings within Vermont’s system. For Veterans weighing a move, see the current VA disability compensation rates to understand how your monthly VA payment interacts with state-level tax benefits. [1]