Special Session Act No. 2
(H.442)
Miscellaneous provisions
This act made miscellaneous amendments including the following:
Secs. 1-3 Unemployment insurance;
Secs. 4-6 Clean Energy Development Fund;
Secs. 7-8 Vermont Telecom special fund authority;
Sec. 9 Tobacco Review Board funding;
Secs. 10-11 Executive branch plan for reductions in force;
Secs. 12-13 State employee retirement incentive;
Sec. 14 Funding for infrastructure for broadband or cellular services;
Sec. 15 [deleted];
* * * Capital Gains Provisions * * *
Secs. 16a-19: The act further amends the definition of taxable income in 32 V.S.A. § 5811(21) from the amendments made in No. 1 of the Acts of the 2009 Special Session (H.441). The further amendment provides that the effective date for the changes to the adjusted net capital gain income provision shall be July 1, 2009 instead of January 1, 2009. A transition rule is created so that capital gains will be treated differently between the first half of the year and the second half of the year: Adjusted net capital gains earned or received after December 31, 2008 but before July 1, 2009 will be subject to the 40 percent exclusion, and adjusted net capital gains earned or received on or after July 1, 2009 but before January 1, 2010 will be subject to the maximum exclusion amount of $1,250.00. Note that this amount is amended to be $2,500.00 in Sec. 22b of Act No. 3 of the 2009 Special Session.
The adjusted net capital gains rules are further amended to provide that adjusted net capital gains from the disposition of real and personal property owned by a farmer and used in the business of farming will continue to be subject to the 40 percent exclusion, as will adjusted net capital gains from the disposition of standing timber. Sec. 17 of the act defines these terms with reference to state and federal laws.
Additionally, the adjusted net capital gains provisions have a further transition rule to allow individuals who are 70 years of age or older at the end of the taxable period to elect either the 40 percent exclusion or the dollar amount exclusion for adjusted net capital gains earned or received on or after July 1, 2009 but before January 1, 2011.
During the period from July 1, 2009 to December 31, 2009, the maximum dollar amount exclusion is $1,250.00 (amended to $2,500.00 by Act No. 3 of the 2009 Special Session), and from January 1, 2010 to December 31, 2010, the maximum dollar amount exclusion is $2,500.00.
Adjusted net capital gains earned or received on or after January 1, 2011 will be subject to a $5,000.00 maximum dollar amount exclusion unless the gains are from the disposition of real or personal farm property or the disposition of standing timber, in which case the gains will continue to be subject to the 40 percent exclusion.
* * * Income Tax Rate Reductions * * *
Sec. 20: The act reduces the marginal income tax rates as follows for taxable year 2009 only: 3.55%, 7.00%, 8.25%, 8.90% and 9.40%.
The act further reduces the marginal income tax rates for taxable year 2010 and after as follows: 3.55%, 6.80%, 7.80%, 8.80% and 8.95%.
Sec. 21: The act directs the legislative council to codify the marginal income tax rates enacted in Sec. 20.
* * * Research and Development Income Tax Credit * * *
Secs. 22-23: The act provides that taxpayers may take a credit against taxes equal to 30 percent of the amount of the federal credit allowed for eligible research and development expenditures made within the state and allows a taxpayer to carry forward any unused credit for up to 10 years. The act provides that the research and development credit shall be available for eligible expenditures made on or after January 1, 2011. Eligible research and development expenditures are defined by reference to the federal law, 26 U.S.C. § 41(a).
* * * Sales and Use Tax Holidays * * *
Sec. 24: The act provides for two sales tax holidays during which the sales to individuals for personal use of tangible personal property with a sales price of $2,000.00 or less will be exempt from the sales and use and local option sales taxes usually imposed. The sales tax holidays will take place on August 22, 2009 and March 6, 2010. The act also provides for the state to reimburse municipalities a total of $100,000.00 of foregone local option sales taxes as a result of the sales tax holidays and to reimburse a total of $10,000.00 to businesses for the cost of reprogramming cash registers.
Sec. 25 Funding of next generation scholarships;
Sec. 26 Funding of buildings and general services department information centers;
Sec. 27 Allocation priorities for FY09 revenue "waterfall";
Sec. 28 Effective date: On passage.
Date Signed by Governor: June 9, 2009
Effective Date: On passage (June 9, 2009, the date on which the governor signed the bill).