S.323 was introduced last week by the Senate Committee on Agriculture. It is a miscellaneous bill related to agricultural subjects, covering a wide array of topics in 45 pages. You can view the initial walk-through, where the legislative council explains the different sections of the bill, here. We’re just beginning to understand the scope of the proposed changes in the bill, and provide a brief section-by-section overview for you here. Action: Reach out to Rural Vermont, and/or to the Senate Committee on Agriculture (find members and their contact info here and here), to share your feedback on this legislation.
Section 1-3: Includes the proposal from the Vermont Agency of Agriculture, Food, and Markets to reinstate the municipal exemption for farming, which includes their proposed changes to the Required Agricultural Practices Rule (RAPs). The Chair of the Senate Committee on Agriculture claims they are not committed to this proposal at this time and that this is more of a placeholder. Read on for a more detailed update on our advocacy to reinstate the municipal exemption and to codify a Right to Grow Food in the next part of this legislative update.
Section 4-5: Section 4 and 5 suggest changes to tax law to make land access for farmers more affordable from a taxable income and property transfer tax lens.
Section 4 seeks to allow for a farmer's taxable income to be decreased by “the amount of any net farm profit” up to $10,000. It would also allow net capital gain from the sale of real estate that is part of a farming operation to be deducted from taxable income if “the buyer continues using the real estate as part of a farming operation” and is either related to the original farmer or has been working on their farm for 10 years prior to the sale. An eligible tax decrease for someone who buys such a farm would become subject to income taxes “upon development of the real estate.”
Section 5 proposes changes to the property transfer tax for the transfer of property that is part of a farming operation, if the new owner will continue using the real estate as part of a farming operation. It mirrors the eligibility criteria of the income tax reduction, specifically that the new owner should either be related to the selling farmer or have worked on their farm for a minimum of 10 years prior to the transfer. Likewise, the property transfer tax would be imposed if the real estate were to be developed after the sale, as “development” is defined in 32 V.S.A. 3752(5) here.
***This is our preliminary understanding of the proposed tax changes in Sections 4 and 5 of S.323, and we reserve the right to correct our reading of this bill as we learn more about it. We are not experts in tax law and recommend you consult with a tax attorney should this subject be important for your farm succession planning.***
Section 6: This section proposes changes to the regulations of structures that are being developed for Accessory On-Farm Businesses (AOFB). In particular, it proposes that Accessory On-Farm Businesses that use less than $250,000 of off-farm ingredients each year will be exempt from Act 250 permits. This is a change from the 2024 language, which based the exemption on at least 50% of sales coming from on-farm products. The specific statutory language,, 10 V.S.A. § 6081(t) was in 2024: “No permit or permit amendment is required for the construction of improvements for an accessory on-farm business for the preparation or processing of qualifying products as defined in 24 V.S.A. § 4412(11)(A)(i)(I), provided that more than 50 percent of the total annual sales of the prepared or processed qualifying products come from products produced on the farm where the business is located.” This sentence determines in law if an Act 250 permit is required for the construction of improvements for an AOFB for “preparation or processing” of qualifying (food) products. This sentence would be changed to remove the 50 percent rule and to insert a new rule where “the total annual sales of the prepared or processed qualifying products that come from products not produced on the farm where the business is located do not exceed $250,000.”
Other sentences in this section of the law specify that no permit is required for the construction of improvements for the storage and sale of (agricultural) products, but that a permit may be required for any construction related to hosting events or farm stays.
Please also consider Section 8 of this bill, as it defines Farm Kitchens of AOFBs.
Section 7: Would amend the definition of “Agricultural Land” in Vermont's tax code of Title 32 to include in the presumption that land is used for agricultural purposes not only if it has produced an annual gross income from the sale of farm crops, but also land that has been used for the production of an “equivalent value of donated farm crops.” The equivalent value would be measured as at least $2,000 worth of product on parcels of up to 25 acres, and an additional $75 per acre for each acre over 25, with the total income required not to exceed $5,000. This production volume would need to be reached in one of two or three of the five calendar years preceding the last to qualify land used for charitable food production as “Agricultural Land” for tax purposes.
Section 8-9: This section defines “Farm kitchen operation” in the law that the Department of Health administers, as: “an accessory on-farm business as defined in 24 V.S.A. § 4412 that utilizes a dedicated kitchen facility located on the premises of a working farm for the purposes of preparing, preserving, packaging, labeling, or storing food products derived from crops, livestock, or other agricultural goods grown or raised on the farm for farm-direct sales, donation, or distribution.” Attention: this proposed change would solely apply as a definition of kitchens used for Accessory On-Farm Businesses and not also for kitchens used by Cottage Food Operations who may not also be a farm and who can use a “home kitchen of the person’s private residential dwelling or a kitchen on the person’s personal property” as defined in 2025 with amendments to 18 V.S.A. § 4301 (a) (5) [this change was made with Act 42 that raised the income threshold for cottage food producers to $30,000]. However, Section 9 proposes that the Department of Health can charge a $75 fee for operating farm kitchens (cottage food businesses are already charged fees by the department).
Section 10: Seemingly adopts the identical bill text of H.677 to Protect Agricultural Land from Large-Scale Solar Energy Development into this miscellaneous agricultural bill. Please defer to the section further down for more information. This section does not include the bill text of the separately proposed H.712 related to raising the Uniform Capacity Tax for large solar development projects.
Section 11: Includes language updates to 6 V.S.A. § 2752 regarding the refusal to purchase dairy products. In one place it’s simply changing “he or she” to “the producer;” and in subsection (d) it switches that a producer instead of the purchaser may request a hearing regarding a purchaser’s refusal to purchase dairy products, giving the producer more leverage to delay the effectiveness of such refusal until a hearing took place and a decision by the Secretary of Agriculture was made.
Section 12: Amends the Local Foods Grant Program to include other contracts aside from grants, renaming the program the “Local Foods Program.”
Section 13: Would repeal 6 V.S.A. chapter 83, the Pest Control Compact, which includes an insurance fund for pest control mitigation across different states of the United States. We would benefit from more context about the current function and efficacy of the compact Government Board and why this change is being proposed. We will follow up with more information in a future legislative update.
Section 14: Is adding a provision to the licensing of pesticide applicators that: “There shall be no limitation on the frequency for retaking examinations for private, commercial, noncommercial, or government applicator certifications or dealer licenses.”
Section 15-20: Section 15-19 is making updates to Vermont’s Seed Law to conform with universal standards established in the Recommended Uniform State Seed Law by the Association of American Seed Control Officials. Section 19 establishes a new policy that allows the Secretary of Agriculture to issue administrative penalties if a distributor fails to report the quantity of genetically engineered, treated, and untreated seed sold in the State in a previous calendar year, establishing this new reporting requirement on a form prescribed by the Secretary in Section 20 for all seeds distributed in or into Vermont regardless of container size. Section 20 also establishes the policy that no person shall distribute seed without registering annually. The pre-existing fees, of $85 per distributor and $10 per ton of seed distributed in containers of more than 10 pounds, stay the same. This Section adds the new explicit exemption from this registration requirement for interpersonal sharing of seed for home, educational, charitable, or personal noncommercial use.
Section 21-22: Would consolidate the Vermont Agricultural Credit Program within the Vermont Economic Development Authority (VEDA) by repealing the program in 10 V.S.A. chapter 16A and redesignating the same in 10 V.S.A. chapter 12, subchapter 16. This is a proposal from the Vermont Agency of Agriculture, Food, and Markets and it also entails some substantive changes to the program. For more detailed information, please listen to the introduction of this section by the legislative council here.
Section 23-24: Would strike the fees required for the permitting of Large and Medium Farm Operations, namely the annual fees of $2,500 or $1,500, respectively. Listen to the recording of the introduction of this language by the Legislative Council here. This would cut a hole into the Budget of the Vermont Agency of Agriculture, Food, and Markets over $230,000, and the agency is requesting an appropriation to fill this gap. The Legislative Council did not provide reasoning for this proposed change but it likely has to do with the new upcoming CAFO permitting requirements that are currently being negotiated and developed by the CAFO stakeholder group in response to the new relations and procedures established between VAAFM and ANR by Act 67 in 2025; and/or the CAFO legislation being developed in House Natural Resources, H.632.
Section 25: Would establish a stakeholder group to study “the permitting process for installation of floor drains for purposes of disposing process wastewater into underground injection wells to better support farmers and their role in the agricultural economy.”
Section 26: would establish the effective date of this law as taking effect on July 1, 2026.
