Vermont’s current budget

Governor Phil Scott released his FY 2026 budget proposal and gave the state of state address in January 2025. The FY 2026 budget was enacted in May 2025.

Vermont enacted its FY 2025 budget in May 2024. The budget reported $2.2 billion in general fund spending and $8.6 billion in total spending, an increase of 9 percent and 1 percent over the previously enacted budget, respectively. In 2025, the state passed a package of tax cuts that expanded the state’s child tax credit and earned income tax credits; it also lowered taxes on Social Security benefits and military pensions. Vermont also passed a tax increase in property taxes in 2024.

Under the American Rescue Plan, Vermont received $1 billion in direct state fiscal aid and $142 million in local government aid from the federal government. As of January 2025, Vermont had allocated over 75 percent of its state ARP. States must spend the funds by Dec. 31, 2026.

According to the National Association of State Budget Officers (NASBO), Vermont’s total expenditures in fiscal year FY 2025 were $7.9 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2025 were $2.9 trillion, ranging from $5.4 billion in Wyoming to $413.8 billion in California.

According to NASBO, Vermont’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:

• FY 2025: $2.4 billion/$9.0 billion
• FY 2024: $2.5 billion/$8.3 billion
• FY 2023: $2.1 billion/$7.9 billion
• FY 2022: $2.0 billion/$7.6 billion
• FY 2021: $1.6 billion/$7.3 billion
• FY 2020: $1.5 billion/$6.2 billion
• FY 2019: $1.6 billion/$5.8 billion

For more on Vermont’s budget, see

• the Vermont Agency of Administration,
  
• the Vermont Office of the State Treasurer, and
  
• the Vermont Legislative Joint Fiscal Office.

Vermont’s budget institutions, rules, and constraints

Vermont uses an annual budget. The legislature is not required to pass a balanced budget, the governor is not required to sign one, and deficits may be carried over into the following year. However, the state has budget rules that require lawmakers to balance revenues and expenditures. Vermont does not have any tax and expenditure limits. The state does limit total authorized debt and debt service incurred by the state.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Overview of Vermont’s state and local expenditure and revenue sources

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Vermont’s combined state and local direct general expenditures were $9.5 billion in FY 2022 (the most recent year census data were available), or $14,743 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $12,083.

Vermont’s largest spending areas per capita were public welfare ($3,642) and elementary and secondary education ($3,615). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Vermont’s combined state and local general revenues were $10.9 billion in FY 2022, or $16,833 per capita. National per capita general revenues were $13,619. Vermont uses all major state and local taxes. After federal transfers, Vermont’s largest sources of per capita revenue were property taxes ($3,184) and individual income taxes ($1,960).

Vermont’s economic trends

Vermont’s per capita income (per the Bureau of Economic Analysis) was $70,086 in 2024, ranking 21st among the states. It was below both the national average of $72,425 and the New England regional average of $82,021. The state’s median household income (five-year estimate) was $81,203 in 2024, ranking 19th among the states and above the national average of $80,734. Vermont’s poverty rate was 10.1 percent in 2024 (five-year estimate), below the national rate of 12.5 percent.

Although Vermont’s averages tell a story about the entire state, Vermont is composed of diverse localities. For example, the city of Rutland’s median household income was $57,675, and its poverty rate was 15.3 percent; the city of South Burlington’s median household income was $106,667, and its poverty rate was 7.2 percent.

Vermont’s unemployment rate has historically been below the national average, particularly following the Great Recession, and in recent years it has been among the lowest in the country.

Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. However, Vermont does not currently have enough information available for the Bureau of Labor Statistics to break down its unemployment rate by race.

The major industries that contributed the most to Vermont’s gross domestic product (GDP) in 2024 were finance, government, social services (i.e. health and education), professional services, and retail. Government, social services , and retail contributed more to Vermont’s GDP than they did to the nation’s and region’s GDP, while finance and professional services were less important to Vermont than they were to the nation and region in 2024.

Looking at more specific industries, among those that accounted for at least 1 percent of Vermont’s GDP in 2023, accommodation produced far more for the state than for the nation, contributing 3.6 percent to Vermont’s GDP and 0.9 percent to the nation’s. Other industries that overperformed in Vermont relative to national averages in 2023 were state and local government, retail, hospitals, and education.

Vermont’s politics

Governor Phil Scott, a Republican, was elected in 2024 with 71 percent of the vote. The next gubernatorial election is in 2026 because Vermont governors serve two-year terms. (New Hampshire is the only other state where governors serve two-year instead of four-year terms.)

Vermont has a divided government. Democrats control both the House of Representatives (107 Democrats to 37 Republicans and 6 independents) and Senate (21 Democrats to 7 Republicans and 1 independent). The entire legislature is up for election in 2026 because both representatives and senators serve two-year terms.

Vermont’s demographics

As of July 2024, Vermont’s population was 648,493. That was up 3.6 percent from 2010. The state’s population growth rate was slower than than the nation’s 9.9 percent growth over the same period. The Urban Institute estimates the state’s population will increase 2.2 percent between 2010 and 2030, less than the nation’s estimated growth rate of 16 percent.

Additional resources

• The State and Local Finance Initiative’s Backgrounders explain the tax and spending issues highlighted in these briefs.
  
• The State Economic Monitor presents updated data and customized visualizations of state economic indicators.
  
• State and Local Finance Data: Exploring the Census of Governments allow users to sort, customize, and download the Census of Governments State and Local Finance series data featured in these summaries.
  
• The State Tax and Economic Review series provides quarterly reports on state tax collections and underlying economic trends in all 50 states.
  
• The Urban Institute’s State Tax Data Subscriptions provide access to up-to-date revenue data in all 50 states.