Downtown Sales Tax Reallocation
The Vermont Downtown Sales Tax Reallocation Program supports major construction or rehab projects in designated downtowns by reallocating sales tax on materials to fund local infrastructure improvements.
Funder: Vermont Agency of Commerce and Community Development
Due Dates: July 1, 2026 (Application deadline)
Funding Amounts: $3 million total annual cap (shared with Downtown & Village Center Tax Credits); individual awards depend on municipal population and project size.
Summary: Reallocates sales taxes on construction materials to support new construction or rehabilitation projects in Vermont’s designated downtowns, with funds used for local infrastructure or municipal support.
Key Information: Developer and municipality must apply jointly; projects must be under construction within 12 months and complete within 36 months.
Description
The Vermont Downtown Sales Tax Reallocation Program provides a unique incentive for municipalities and developers undertaking major construction or rehabilitation projects within Vermont's designated downtown districts. Through this program, sales taxes paid on construction materials for qualified projects can be reallocated by the state to the municipality, which must then use these funds to support the approved project—often for associated infrastructure or improvements that enable or enhance the development. The program is designed to encourage downtown revitalization, support new housing, commercial, or mixed-use development, and foster public-private investment in Vermont’s urban centers.
