Vermont Faces Looming Property Tax Increases

One-time funds used to lower school taxes this year will create budget shortfalls next year.

Published on Feb. 22, 2026

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Some Vermont school districts are facing projected tax increases for the next school year that seem out of line with their proposed spending increases. This is due in part to the Legislature's decision last year to use one-time funds to lower tax rates for the current school year, which has pushed the shortfall into the next year. The projected tax increases are needed to cover fiscal 2027 spending increases and fill the gap created by the use of one-time funds this year.

Why it matters

The use of one-time funds to lower property taxes has become a recurring pattern in Vermont, with the state government providing temporary relief but then facing the prospect of larger tax hikes in subsequent years. This cycle raises questions about the long-term sustainability of the education funding system and the fairness of how the tax burden is distributed.

The details

School tax rates are determined by per-pupil spending, but spending and tax rates don't necessarily track one another year-to-year. Property values also affect school property tax rates, and in recent years, the use of one-time funds from the General Fund and reserves has kept property taxes and rates lower than they would have been. For fiscal 2026, the Legislature used $78 million from the General Fund and $32 million in reserves to buy down the tax rates, providing immediate relief for homeowners but pushing the shortfall into the next year.

  • In December 2024, the tax commissioner warned that the average property tax bill would rise 14% for fiscal 2026.
  • After the rate buy-down, the average tax bill increase was only 1.1% for fiscal 2026.
  • In December 2025, the commissioner warned that property taxes would rise 12% in fiscal 2027.

The players

Jack Hoffman

An analyst at the Public Assets Institute who wrote the article.

Vermont Legislature

The state legislature that decided to use one-time funds to lower tax rates for the current school year.

Vermont Tax Commissioner

The state official who issues annual warnings about looming property tax increases.

Vermont Governor

The state's governor who has called for school funding reform to reduce education spending.

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What they’re saying

“In the early 2000s, when we adopted the current system, 60 percent of the revenue in the Education Fund came from property taxes, and 40 percent came from General Fund sources—dedicated taxes or direct transfers. The ratio has fluctuated, but generally shifted more of the burden onto property taxes.”

— Jack Hoffman, Analyst, Public Assets Institute (vermontbiz.com)

What’s next

The governor and the Legislature are already talking about another infusion of one-time money to hold down school taxes for next year, which could forestall the projected 12% tax increase for fiscal 2027.

The takeaway

The recurring use of one-time funds to lower property taxes in Vermont has created a cycle of temporary relief followed by larger tax hikes in subsequent years. This highlights the need for a more sustainable and equitable approach to education funding that distributes the tax burden fairly across different revenue sources.