H.702 raises the cap on how much renewable power utilities can accept from customers. The current limit is 4 percent of peak power demand; the new proposed cap will be 15 percent.
The legislation allows more homeowners to install solar systems and feed excess power to the grid.
Customers can avoid having to buy expensive solar batteries with a net metering system. Utilities get a boost from the locally distributed power and credit customers' bills for the electricity.
On Wednesday, Democrats, Republicans, Progressives and independents overwhelmingly supported the proposal, 136-8, on second reading.
Rep. Tony Klein, D-East Montpelier, said "net metering is one of Vermont's most successful renewable energy programs" because it has helped to avoid "hundreds of millions of dollars in costly transmission projects."
The expansion of net metering is part of the state's long-term push for renewables. The state's goal is to be 90 percent reliant on renewable energy by 2050.
House Speaker Shap Smith said in a statement that the net metering bill is "an important step as we move towards a carbon-free energy future."
Republicans on Wednesday said they are concerned about the impact of the program on ratepayers.
The bill now goes to the Senate.
Gov. Peter Shumlin supports H.702.
"Today the House of Representatives gave its strong backing to an effort to expand Vermont's net metering program, which has helped our state become a national leader in solar energy and green jobs," Shumlin said in a statement. "I thank the House, and in particular the Members of the Committee on Natural Resources and Energy, for their thoughtful and thorough work to advance this legislation."