Survivor Benefit Plan, Reserve Component Survivor Benefit Plan and Retired Serviceman’s Family Protection Plan annuities can be exempted from Vermont income tax starting with the 2025 tax year, on returns filed after 1 January 2026. If your federal adjusted gross income is $125,000 or less the whole annuity is exempt. Between $125,000 and $175,000 you get a partial exemption, worked out by subtracting your adjusted gross income from $175,000, dividing by $50,000, and multiplying the result by your total survivor annuities. Above $175,000 there is no exemption.
There is nothing to apply for. Claim the exemption on your Vermont return for the 2025 tax year or later, and ask the Vermont Department of Taxes or your preparer to work out the proration if your income is in the partial range.
Your Form 1099-R showing the annuity payments, and your federal return showing your adjusted gross income.
