Under Vt. Stat. Ann. tit 32, § 3108 (establishment of interest rates), the Vermont Commissioner of Taxes is required to set interest rates no later than December 15th of each year with rates that become effective on January 1st of the following year and apply to interest that accrues in that calendar year. On November 1, 2023, the Vermont Commissioner of Taxes issued a memorandum on interest rates for 2024. The memorandum announced that the annual rate for overpayment of taxes (the “Declared Rate”) for 2025 will be 8.50%. Similarly, the annual interest rate for underpayment of tax will also be 8.50%.
The Declared Rate is found by rounding the average prime loan rate (as determined by the Board of Governors of the Federal Reserve System) to the nearest quarter of a percent. The average prime loan rate for the 12-month period beginning October 1, 2023, and ending September 30, 2024. was 8.48%, which rounded to the nearest quarter of a percent results in a Declared Rate of 8.50% for calendar year 2025.
The Declared Rate is used to determine whether a loan is considered a “High Rate / High Point loan” subject to Vermont’s anti-predatory lending law. A first-lien, residential loan in Vermont is “High Rate” if the interest rate for the loan exceeds the adjusted Declared Rate by more than three percent (3%). For more information, reference DocMagic’s High Cost Memo on the Vermont High Rate / High Point Law.
DocMagic will be updating the Vermont High Cost Test as well as our Vermont High Rate, High Point Disclosure form (Form ID: VTHRHP.DSC) to reflect the declared rate adjustment as of the January 1, 2025 effective date.
If you have any questions regarding this article, please contact DocMagic’s Compliance Department.
