Policy News: Final 2025 Legislative Update & Senate Tax Bill Revisions

The Vermont Legislature adjourned on June 16th after lawmakers finally reached agreement on the keystone education reform bill. After weeks of negotiations between the two chambers extended the session into June, the compromise is a gradual plan to consolidate school districts and shift to funding education with a foundation formula.

This extra time also allowed for a number of other bills to advance this session over the past month, though without the majorities held by Democrats/Progressives in recent years, all bills vetoed by the Governor were sustained. Finally, when adjourning, both the House and Senate approved a measure that allows them “to reconvene on the joint call of the Speaker of the House and the President Pro Tempore of the Senate, if needed,” for example due to funding cuts made by the Trump Administration.

We’ve included updates below on bills relevant to nonprofits.

While the legislature continued its work, Common Good Vermont joined colleagues from across the country for Nonprofit Lobby Day in DC. Our collective advocacy resulted in several favorable changes to the “One Big Beautiful Bill Act.” Read on for the good, the bad, and the ugly of the latest draft of the bill from the Senate Finance Committee.

Tax Package Advances in Senate

Last month, the House of Representatives passed the “One Big Beautiful Bill Act,” which now continues to advance in the Senate – Republicans hope to have it enacted by July 4th. On June 10th, members of the National Council of Nonprofits convened on Capitol Hill for Nonprofit Lobby Day to call on Congress to oppose harmful provisions of the bill and protect nonprofits and our communities.

Our advocacy resulted in some improvements to the bill, but there is still plenty to oppose. Here is an overview of changes made by Senate leadership (from the National Council of Nonprofits):

The Good:

  • Removes provisions to increase taxes on foundations. The Senate bill removes a House provision that would have significantly reduced financial resources available to nonprofit organizations to advance their missions. Under the House proposal, foundations with assets of more than $5 billion would have seen tax rates of 10%, those with assets between $250 million to $5 billion would have seen tax rates of 5%, those with assets between $50 million and $250 million would have paid 2.8%, and those with assets under $50 million would have continued to pay the existing 1.4% tax. At a time when nonprofit organizations face enormous financial challenges, the House provision would have made it even harder for organizations to serve their communities and fill the gaps unmet by local, state, and federal governments.
  • Removes provisions to impose new taxes on nonprofits. The Senate bill removes a House proposal to tax nonprofit employers on the transportation benefits they provide to employees. The House bill would have increased and expanded Unrelated Business Income Tax (UBIT) to include any qualified transportation fringe benefit, such as transit benefits or parking benefits, for charitable organizations. This provision was previously passed in 2017 and subsequently repealed because it was largely unworkable. Nonprofits and the Internal Revenue Service (IRS) faced enormous challenges in administering and complying with the provision. See NCN’s one-pager on the UBIT provision.
  • Expands the universal charitable deduction to encourage charitable giving for people who do not itemize their taxes. Sen. Lankford, Sen. Coons, Rep. Moore, and Rep. Pappas have long championed this idea in the bipartisan Charitable Act. The House bill created a non-itemizer tax deduction up to $150 for individuals and $300 for married couples. The Senate bill expands this above-the-line deduction to $1,000 for individuals and $2,000 for married couples.  See NCN’s one-pager on the Charitable Act.

The Bad:

  • Despite these positive changes, the bill includes provisions that discourage charitable donations made by individuals and corporations. The bill significantly decreases the value of the charitable deduction for high-income taxpayers by capping itemized deductions (Section 70111), sets a new 0.5% floor for the itemized charitable deduction (Section 70425), and discourages corporate giving by creating a 1% floor for charitable contributions by corporations (Section 70426). If enacted, these provisions could discourage charitable giving by individuals and corporations.
  • Cut the Supplemental Nutrition Assistance Program (SNAP). While the House proposal would have cut SNAP by the largest amount in the program’s history, the Senate bill still puts millions of people at risk of food insecurity. The House bill proposed to require all states to cover a share of the costs of SNAP benefits; the Senate, on the other hand, only imposes these costs if the state has an error rate above 6%. Like the House bill, the Senate bill decreases the administrative costs the federal government pays by 25%. Beginning in fiscal year 2027, this provision effectively shifts administrative costs to state governments. The Senate bill also removes an exemption from work requirements for people experiencing homelessness or youth aging out of foster care.

The Ugly:

  • Cut funding for Medicaid. While NCN and others are still reviewing the details, the Senate bill reportedly cuts more resources from Medicaid than the nearly $800 billion reduction proposed in the House. The House bill would result in nearly 13.7 million fewer people accessing healthcare, according to the Congressional Budget Office (CBO). The Senate provisions are largely considered to be a placeholder for continued negotiations among Republican members of Congress.

The bill heads to the Senate floor for a vote likely next week, before being sent back to the House. Read more:

The Final Weeks of the VT Legislature

Housing/Homelessness:

  • VETOED: H. 91, An act relating to the Vermont Homeless Emergency Assistance and Responsive Transition to Housing Program
    H. 91 sought to restructure the State’s motel voucher program by moving from a state-managed program to a regional model managed by community action agencies. After being passed on party lines, Governor Scott vetoed the bill, maintaining his stance that the program continues to be too costly. Much like the two attempts to extend the program through the Budget Adjustment Act, votes were not there to override the veto. Despite calls for action from housing advocates, the motel program continues to operate with restrictions on eligibility and time-limits.
  • SIGNED BY GOVERNOR: S. 127, An act relating to housing and housing development
    At the center of this year’s major housing bill is the Community and Housing Infrastructure Program. Similar to the tax increment financing (TIF) program, CHIP lets municipalities and developers borrow funds for infrastructure critical to housing projects. Debate over the level of guardrails on the program landed somewhere in the middle, and ultimately won Scott’s signature on a bill that was a priority for the Administration this year. Read more.

Employment/Workforce Development:

  • SIGNED BY GOVERNOR: S. 122, An act relating to economic and workforce development
    This omnibus economic and workforce development bill includes funds to support services for small businesses and the International Trade Division of DEC, and creates a Vermont-Ireland Trade Commission. It also creates a task force to explore the development of a convention center and performance venue. Finally, the bill updates statute to direct the Executive Director of the Office of Workforce Strategy Development to co-lead workforce education and employment and training alongside the Commissioner of Labor. Read the bill.
  • SIGNED BY GOVERNOR: H. 461, An act relating to expanding employee access to unpaid leave
    The bill expands the definitions of unpaid leave types including bereavement leave, family leave, and parental leave. It also adds a new type of leave – “safe leave” – which covers instances where leave is required for reasons related to domestic violence, sexual assault, or stalking. Employees are entitled up to 12 weeks unpaid leave during any 12 month period. Read more.
  • SIGNED BY GOVERNOR: H. 266, An act relating to the 340B prescription drug pricing program
    This bill limits the amount health care providers can charge for outpatient prescription drugs. Read more.
  • SIGNED BY GOVERNOR: S. 126, An act relating to health care payment and delivery system reform
    This bill includes a provision that requires the development of a statewide health care delivery plan by 2028 and another that has the Green Mountain Care Board implement reference-based pricing. Read more.

Miscellaneous

  • PENDING: H. 474, An act relating to miscellaneous changes to election law
    Passed by the House and Senate, the bill that makes various changes to election law heads to the Governor. The legislation would expand campaign finance disclosure requirements, prohibit someone who loses in the primary to run under another party in the general election, and direct officials to audit voter checklists. The study of ranked-choice voting for presidential primaries was not included. Read more.
  • SIGNED BY GOVERNOR: S. 69, An act relating to an age-appropriate design code
    While other data privacy bills failed to advance this year, this “Kids Code” legislation would require tech companies to implement certain safety measures for users under 18. Read more.