Signed on May 31, S,B. 53 makes several changes to Vermont’s corporate income tax applicable to tax years beginning on or after January 1, 2023. These include (1) the repeal of an overseas business organization exclusion and its replacement with a foreign corporation exclusion, (2) a minimum tax increase, (3) use of a single sales factor apportionment formula and throwback repeal, (4) requiring informational reporting of payroll and property factors, (5) migrating from Joyce to Finnigan treatment, and (6) application of federal consolidated return rules.
The takeaway: Vermont taxpayers should consider implications to their 2023 tax year due to the changes implemented by S.B. 53. A close focus should be on the composition of a Vermont combined group, which would no longer exclude 80/20 companies but would exclude foreign corporations, in addition to the application of the federal consolidated return rules. The single sales factor and repeal of the throwback rule may also have a significant impact on a taxpayer’s Vermont tax liability.