VT — State Policy Updated 2026-07-17

Vermont

1) Incentive programs

Bottom line: Vermont still does not have a data-center-specific tax incentive in force. The state’s main tools are general economic-development programs, financing programs, and municipal infrastructure-finance tools; a data center would have to qualify under those general rules rather than a data-center carveout. Act 128 made the general VEGI program permanent and modified other development-finance tools, while Vermont’s data-center-specific H.727 would have regulated large data centers rather than subsidizing them and did not become law after the Governor’s veto was sustained on May 29, 2026. Vermont Legislature S.327 status, 2026-06-08; Vermont Legislature Act 128, 2026-06-08; Vermont Legislature H.727 status, 2026-05-29

  • Vermont Employment Growth Incentive (VEGI) - performance-based incentive authorized in statute; incentives are direct cash payments in annual installments and must be supported by a cost-benefit model. The wage-threshold statute defines qualifying-job thresholds at 60% above minimum wage, or 40% above minimum wage in higher-unemployment labor-market areas. Vermont Statutes 32 V.S.A. Sec. 3330, 2026-06-10; Vermont Statutes 32 V.S.A. Sec. 3333, 2026-06-10; Vermont Statutes 32 V.S.A. Sec. 3326, 2026-06-10; Vermont Statutes 32 V.S.A. Sec. 3331, 2026-06-10

    • Program guidance for 2025 described minimum qualifying job wages at 140% or 160% of the Vermont minimum wage depending on labor-market area and defined qualifying jobs as full-time, permanent, and benefits-eligible. Vermont Economic Progress Council, 2025-12-23
    • The award period is five consecutive years, and the utilization period includes the award period plus four additional years following each award year. Vermont Statutes 32 V.S.A. Sec. 3331, 2026-06-10
    • VEGI made permanent and annual caps reduced: Although standalone S.225 died in committee, S.327 became Act 128 on June 8 and accomplished the same core sunset change by repealing the January 1, 2027 cutoff for new VEGI applications and approvals. Act 128 also reduced the annual cap for initial VEGI approvals from $15 million to $10 million and the annual cap for final approvals from $10 million to $5 million, with authority for the Governor and Joint Fiscal Committee to add up to $5 million to the final-approval cap. These are changes to a general incentive, not data-center-specific preferences. Vermont Legislature S.327 status, 2026-06-08; Vermont Legislature Act 128 secs. 9-9a, 2026-06-08

  • Vermont Economic Development Authority (VEDA) financing - state financing authority providing loans for business, commercial, agricultural, and energy projects. This is not data-center-specific. VEDA, 2026-06-10

  • Tax Increment Financing (TIF) - municipal tool that captures incremental property-tax growth within a district to finance public infrastructure, including utilities, transportation, public facilities, and site preparation. It is not data-center-specific but could support public infrastructure around a qualifying site. Vermont Statutes 24 V.S.A. Sec. 1891, 2026-06-10

  • Commercial Property Assessed Clean Energy (C-PACE) - Act 128 authorized municipalities to create C-PACE districts through which private financing for qualifying energy efficiency, renewable-energy, water-conservation, and resiliency improvements may be repaid through special assessments on commercial or industrial property. The program is locally optional and project-improvement-specific; it contains no data-center preference. Vermont Legislature Act 128 secs. 14a-14g, 2026-06-08

  • Rural Industry Development Grant Program - Act 128 placed a general site-development and business relocation/expansion grant program in statute. Grants flow through local development corporations and generally may cover up to the lesser of $1 million or 50% of project cost, with up to $2 million available for qualifying federally impacted property; eligible uses include site development, permitting, and infrastructure. The enacted program is not data-center-specific. Vermont Legislature Act 128 secs. 12a-12b, 2026-06-08

  • Sales and use tax exemptions (general) - Vermont’s sales/use tax statute includes exemptions for certain activities, including manufacturing machinery and equipment, but no explicit data-center, server, or data-center-equipment exemption appears in the statute. Vermont Statutes 32 V.S.A. Sec. 9741, 2026-06-10; Vermont Joint Fiscal Office, 2025-01-15

Clean energy conditions: No Vermont incentive statute located in this review explicitly conditions data-center incentives on clean energy. H.727 would have imposed operational requirements for large data centers, including large-load service equity contracts, demand-side management, energy-efficiency design consultation, restrictions on combustion backup generation except for emergency use, and water-quality protections, but the bill was vetoed and did not take effect. Vermont Legislature H.727 as passed by both House and Senate, 2026-05-22; Vermont Legislature, 2026-05-29

2) Restrictions and moratoriums

  • No statewide data-center moratorium or dedicated data-center regulatory statute is in force as of 2026-07-17. S.205, the proposed AI data-center moratorium through July 1, 2030 for facilities requiring more than 100 MW of new AI load, remained in the Senate Committee on Finance with no roll-call votes and no act information when the 2026 legislative session adjourned. H.727 passed both chambers but was vetoed on May 28, 2026, and the House sustained the veto 83-52 on May 29, 2026. Vermont Legislature S.205, 2026-01-06; VTDigger, 2026-05-29; Vermont Legislature H.727, 2026-05-29; Vermont Senate Journal, 2026-05-28

  • H.727 (vetoed) would have created Vermont’s first data-center-specific regulatory framework. The final bill applied to data centers using or able to use 20 MW or more; required PUC-approved large-load service equity contracts; required energy-efficiency design consultation; required quarterly and annual energy/water reporting; added data-center construction to Act 250’s definition of “development”; pushed water-cooled facilities toward closed-loop cooling; required groundwater and surface-water withdrawal permits for cooling water; and required PFAS monitoring plans for certain wastewater discharges. Because the veto was sustained, these requirements are not operative law. Vermont Legislature H.727 as passed by both House and Senate, 2026-05-22; Vermont Legislature H.727 status, 2026-05-29

  • Royalton local moratorium policy: On Town Meeting Day, Royalton voters approved an article supporting a five-year moratorium on AI and cryptocurrency data centers. The article directed the Planning Commission to incorporate the policy into the town plan; reporting before the vote correctly noted that a town-plan statement would guide future regulation but would not itself outlaw data centers. The result is therefore voter-approved policy direction, not an enforceable zoning ban by itself. Valley News, 2026-03-03; WCAX, 2026-02-24

  • South Burlington zoning amendments advanced but were not yet adopted: After its June 23 public hearing, the Planning Commission approved LDR-26-07 and transmitted it with the other 2026 land-development amendments to the City Council; the city’s project page records a City Council first reading on July 6. The approved draft defines a data center, aggregates facilities on one site, treats facilities of 5,000 square feet or less as general commercial uses, defines small data centers as under 20,000 square feet and large data centers as 20,000 square feet or more, and limits where the use may be located. City materials say the proposal responds to electricity, water, and land-consumption concerns. As of July 17, the city page did not identify LDR-26-07 as adopted. South Burlington land-development amendment page, 2026-07-06; South Burlington Planning Commission-approved LDR-26-07 draft, 2026-06-23; South Burlington plain-language summary, 2026-05-27

  • Statewide environmental constraints for large developments still run through Act 250 where a project otherwise meets jurisdictional triggers. A permit cannot be issued if a project would cause undue water or air pollution, among other criteria. H.727 would have added a categorical data-center Act 250 trigger, but that addition did not take effect. Vermont Statutes 10 V.S.A. Sec. 6086, 2026-06-10; Vermont Legislature H.727 status, 2026-05-29

  • Water withdrawal reporting: Withdrawals of 10,000 gallons/day or 150,000 gallons/30 days must register and report to the state. H.727 would have gone further for data centers by requiring cooling-related groundwater and surface-water withdrawal permits, but those provisions were vetoed with the bill. Vermont Statutes 10 V.S.A. Sec. 1042, 2026-06-10; Vermont Legislature H.727 as passed by both House and Senate, 2026-05-22

  • Local zoning restrictions and temporary controls: Municipal bylaws determine whether uses are by-right, conditional, or prohibited in zoning districts; municipalities may also adopt interim bylaws while studying permanent bylaws. Vermont Statutes 24 V.S.A. Sec. 4414, 2026-06-10; Vermont Statutes 24 V.S.A. Sec. 4415, 2026-06-10; Vermont Statutes 24 V.S.A. Sec. 4464, 2026-06-10

3) Local governance

  • Vermont does not preempt local zoning for data centers in the statutes reviewed. Municipalities retain zoning authority to define permitted and conditional uses and to set development standards, subject to statutory notice and hearing requirements. Vermont Statutes 24 V.S.A. Sec. 4414, 2026-06-10; Vermont Statutes 24 V.S.A. Sec. 4464, 2026-06-10

  • State-level review overlays local zoning only when existing state permits are triggered. Act 250, environmental permits, utility interconnection review, and PUC authority may apply depending on project characteristics; H.727 would have added a data-center-specific overlay but failed. Vermont Statutes 10 V.S.A. Sec. 6086, 2026-06-10; Vermont Legislature H.727 status, 2026-05-29

  • Chittenden County adopted regional data-center planning guidance: The Chittenden County Regional Planning Commission adopted the 2026 ECOS Regional Plan on May 20. Its new data-center section directs the region to monitor the emerging use and help communities and regulators develop tools addressing electricity and ratepayer effects, transmission capacity, land consumption, jobs, and water demand. The plan says current transmission conditions may make southern Vermont more likely than northern Vermont to attract a large facility; it is planning guidance, not a moratorium, zoning bylaw, project approval, or utility load forecast. Chittenden County Regional Planning Commission, 2026-05-20

  • Community concern is now documented at both state and local levels. Royalton’s town-meeting vote, South Burlington’s zoning work, legislative testimony on H.727, and Vernon’s reaction to preliminary reuse discussions at the former Vermont Yankee site show concern about energy use, water use, noise, PFAS/wastewater, ratepayer cost shifting, local scale, and the timing of public participation. Vernon officials said the town had no role in the private lease discussions described in June; the data-center concept was still years from any permitting phase. Valley News, 2026-03-03; South Burlington plain-language summary, 2026-05-27; Vermont Legislature H.727 committee activity, 2026-05-20; Vermont Public, 2026-06-15

4) Legislative activity (2024-2026)

  • H.727 (2026) - “Sustainable data center deployment” / “Vermont Sustainable Data Centers Act” - vetoed, no act. The bill moved substantially after February: committee work continued through May; the Senate passed an amendment 26-3 on May 15; both chambers passed a final version; Governor Phil Scott vetoed the bill on May 28, 2026; and the House sustained the veto 83-52 on May 29, 2026. The final bill would have applied to 20 MW data centers, required PUC-approved large-load service equity contracts, required Act 250 and water protections, and created reporting and demand-side management requirements. Vermont Legislature H.727 status, 2026-05-29; Vermont Legislature H.727 as passed by both House and Senate, 2026-05-22; Vermont Senate Journal, 2026-05-28

  • S.205 (2026) - “Temporary moratorium on AI data centers” - died in committee at adjournment. The bill would have prohibited operation, construction, or site preparation for AI data centers requiring more than 100 MW of new load until July 1, 2030 and required a PUC investigation/report by January 15, 2027. The status page shows the last recorded action as referral to Senate Finance on January 6, 2026, with committee meetings through February 18, 2026, no roll-call votes, no fiscal documents, and no act information; the Legislature adjourned on May 29, 2026. Vermont Legislature S.205 status, 2026-01-06; Vermont Legislature S.205 as introduced, 2026-01-06; VTDigger, 2026-05-29

  • S.327 (2026) / Act 128 - economic-development program changes - enacted June 8. The act repealed the prospective January 1, 2027 VEGI cutoff, reduced the program’s annual approval caps, authorized municipal C-PACE districts, and put the Rural Industry Development Grant Program in statute. None of these provisions creates a data-center-specific preference. Vermont Legislature S.327 status, 2026-06-08; Vermont Legislature Act 128, 2026-06-08

  • S.225 (2026) - standalone VEGI cutoff repeal - died in committee, but its core policy was enacted through S.327. S.225 remained in Senate Finance after committee consideration through February 4 and did not itself become law. It is therefore incorrect to infer that the January 1, 2027 cutoff survived: Act 128 repealed it. Neither bill contained a data-center-specific preference. Vermont Legislature S.225 status, 2026-01-08; Vermont Legislature Act 128 sec. 9, 2026-06-08

  • S.247 (2024) proposed repealing the VEGI sunset, allowing VEPC to continue accepting VEGI applications beyond a statutory end date. It was not a data-center bill. Vermont Legislature S.247, 2024-01-09

  • H.708 (2024) proposed a forgivable-loan track within VEGI and repeal of the VEGI sunset. It was not a data-center bill. Vermont Legislature H.708, 2024-01-10

  • Act 181 (H.687, 2024) reformed land-use/Act 250 administration, created the Land Use Review Board, and revised Act 250’s framework. It is not data-center-specific but remains relevant for large-project permitting. Vermont Legislature Act 181, 2024-06-17; Vermont Legislature Act 181 summary, 2024-06-17

5) Notable projects / operators

  • FirstLight data center (Williston/Burlington area) - legacy regional colocation/fiber presence, not a hyperscale project. VTDigger reported in 2014 that FirstLight was expanding its Vermont data-center capacity and that the expansion would not add employees beyond the then-current seven. VTDigger, 2014-03-24

  • Existing small/traditional facilities: 2026 legislative reporting cited at least three traditional data centers in Chittenden County with combined use of about 5 MW, which is far below the 20 MW threshold used in H.727. VTDigger, 2026-02-24

  • No filed or committed large-scale Vermont proposal was identified. Vermont Public reported on February 26, 2026 that Department of Public Service Commissioner Kerrick Johnson said there were no current proposals to bring a large-scale data center to Vermont; Green Mountain Power said it had received “maybe one or two very speculative general inquiries” over the years but no serious proposals. A preliminary Vernon reuse discussion disclosed in June, described below, qualifies the earlier statement but was not an announced data-center project or permit filing. Vermont Public, 2026-02-26; Vermont Public, 2026-06-15

  • St. Albans proposal fell through before 2026. Reporting in February 2026 described a prior St. Albans proposal for one of two possible projects, 8-12 MW or 50 MW, with about 1,000 temporary construction jobs and 20 permanent jobs for the larger facility; the proposal fell through because connecting to the grid would have required approximately $30 million in substation/transmission investment. VTDigger, 2026-02-24

  • GMP site study is not a project announcement. In April 2026 legislative testimony, Green Mountain Power said it studied adding 50-200 MW at specific locations - Williston near the GlobalFoundries campus, New Haven near the VELCO substation, Vernon near the former Vermont Yankee site, and West Rutland/Granite - and concluded those locations could add 50-200 MW without significant system concern and could lower customer costs. That testimony supports technical feasibility at selected sites but does not identify a committed developer, investment amount, or interconnection request. Vermont Legislature / Green Mountain Power testimony, 2026-04-22

  • Former Vermont Yankee site, Vernon - preliminary reuse discussion, not an announced project: PowerTransitions disclosed that it had signed a lease at the approximately 140-acre former nuclear-plant property and was considering several possible energy-intensive reuses, including a data center, battery storage, or advanced nuclear generation. The data-center concept was described as preliminary and likely years from permitting; no operator, investment amount, MW load, construction schedule, or job estimate was announced. The site’s existing high-voltage switchyard is a redevelopment asset, but the disclosure did not identify an interconnection request. Vermont Public, 2026-06-15; WCAX, 2026-06-18

Notes on methods

  • Updated on 2026-07-17 with web searches and primary-source checks covering February 1, 2026 through July 17, 2026. Priority was given to bill/status pages, bill text, fiscal notes, municipal notices and approved drafts, utility and grid-operator materials, PUC records, and then Vermont news sources for local/project context.