Property taxes in Vermont are projected to soar 18.5 percent next year due largely to increases in education spending, a prospect Gov. Phil Scott blasted as "not acceptable."

The increases are largely being driven by a 12 percent hike in school spending, Tax Commissioner Craig Bolio wrote in his annual education tax rate letter to legislative leaders. The higher spending is due to a post-pandemic drop in federal school funding, a 16 percent spike in health care costs, multiple construction projects and overall inflation, Bolio wrote.

In addition, changes to education funding formulas passed in 2022 meant to address inequities in education spending contributed to the increases, Bolio wrote.



“For Vermonters and policymakers concerned about property taxes, housing affordability, or overall tax burden, this letter should sound a major alarm,” Bolio wrote.

The increases are by no means assured. Local school boards can still take steps to rein in costs, and lawmakers won’t be setting the property tax rates until next year.

But if current projections hold, per student spending in the state would increase from $20,351 to $22,953. That would translate into an increase in the homestead property tax rate — the rates charged for people whose homes are their primary residence — rising from $1.54 per $100 of value in the current fiscal year to $1.80 in the next.

For a $250,000 home, that would increase property taxes by about $650, Bolio wrote.

“I understand that this will not be welcome news for Vermonters,” Bolio said in a press release accompanying the letter. “This forecast predicts an unprecedented property tax increase next year, with very real financial impacts at a time Vermonters are already struggling to pay for housing."

After the letter was released, Scott seized on the increase to call on lawmakers to prevent the tax hikes. The forecasted "property tax increase would hurt Vermonters and our economy, and we cannot let it happen,” Scott said in a press release. “At a time when housing costs and interest rates are elevated, higher property taxes will make our housing and workforce crises worse, and I sincerely hope the Legislature agrees.”

He noted that he has long warned about the impact of rising costs on Vermonters, and he called on lawmakers and school boards to do their parts to address the state’s “affordability crisis.”

“Together, we can, and must, prevent this untenable tax increase, or anything close to it, from coming to pass,” he wrote.

"This is not unique to Vermont, and it is happening in all sectors of the economy across the country," she said.

She said teachers and students need support that is "fair and sustainable," and she looked forward to working with Scott to "chart a course that ensures the long-term prosperity of our state and the proper funding of our students' education."