Ed Funding Reforms Pass
Despite opposition from many Democrats and widespread concern across the public education system, lawmakers in Montpelier mustered enough support to send a sweeping K-12 education overhaul to Governor Phil Scott. H.454, a 155-page bill propelled by Republican gains in the last election, proposes transformative changes to Vermont’s education system. It shifts school funding from local control to a statewide foundation formula and sets the stage for large-scale district consolidation. The bill passed the Senate 17-12, with most Republicans in support. In the House, it passed 96-45. Supporters argue the bill will stabilize property taxes, direct funding where it’s most needed, and simplify school governance. The legislation would require school districts to spend a set amount per student, with the option for voters to approve up to 10% in additional spending. It aims to create districts of at least 4,000 students and establishes minimum class sizes that, after three years of noncompliance, could trigger school closures. A task force will develop up to three redistricting models this summer, subject to legislative approval next session. Most provisions would take effect in 2028. A key flashpoint is the proposed shift from income-adjusted property tax credits to a homestead exemption. The new model would exempt up to $425,000 in home value for households earning under $115,000. Thanks to the effort of the business community, lawmakers removed one of the most controversial proposals—a separate tax classification for commercial and industrial properties. However, the bill still creates a separate category for second homes, raising concerns in tourism-dependent towns.
Gas and Diesel Ban Repealed, Lawsuit Filed
President Trump signed into law two joint resolutions from Congress that eliminate California’s authority to ban gasoline and diesel-powered vehicles. Vermont adopted the same “California Rule” three years ago, which requires that 35% of new light-duty vehicles plug-in rather than gas up. It was set to take effect later this year and quickly scale up to require 100% EVs over the next decade. Vermont also passed a similar rule for medium and heavy-duty vehicles, which effectively banned diesel trucks. Hours after the ban was lifted, Vermont Attorney General Charity Clark joined her counterpart in California to file this lawsuit against the Trump Administration in order to reinstate the mandates. While all of this plays out in the courts, the EV mandates in Vermont will not be enforced. That's because Governor Phil Scott issued an Executive Order last month that effectively pulled the plug on the regulation for at least eighteen months. Watch more on that here.
PUC Rules on Registry
The Vermont Public Utility Commission issued a ruling on May 27 about the Clean Heat Standard. The order states that “The Commission cannot take further action on the Clean Heat Standard.” When it comes to the Fuel Dealer Registry, the commission stated that existing law (30 V.S.A. § 8124(b)(1) requires dealers to file and for the PUC to collect information on June 30 every year. But there are no plans to do so and no effort to enforce compliance. According to the ruling: “absent a legislatively approved Clean Heat Standard, the Commission will not process fuel dealer registrations, update its website of fuel dealer registrants, or enforce against non-registration.” Download the document at CleanHeatVT.com.
Housing Bill Signed
Governor Scott has signed S.127, the omnibus housing bill. With an estimated 41,000 new housing units needed by 2030—and current production meeting just a quarter of that—demand continues to outpace supply vastly. The key driver of investment is the Community and Housing Infrastructure Program (CHIP), which is designed to finance housing-supportive infrastructure using incremental tax revenue. The CHIP program is a $2 billion infrastructure program that will boost Vermont's Education Fund by up to $38 million per year, while adding a new tool to address the state's housing crisis. Click here for more on CHIP.
Help for Vets
Lawmakers passed a tax relief bill that includes a long-sought exemption for military pensions. Vermont is one of the few states that still taxes military retirement income. Exempting these pensions could help retain and attract skilled veterans to the state’s workforce. The legislation will fully exempt military pensions from state income taxes for retirees with adjusted gross incomes up to $125,000, with partial exemptions for those earning up to $175,000. About half of Vermont’s 3,593 military retirees would qualify for the full exemption, with another 627 receiving partial relief.
Action Plan
The Vermont Climate Council is backing a sweeping set of recommendations focused on reducing greenhouse gas emissions. At the center of the proposal is a recommendation for Vermont to join a regional cap-and-invest program that would impose new costs on gasoline, diesel, and home heating fuels. If cap-and-invest fails to deliver required emissions cuts, the Council suggests adopting a modified Clean Heat Standard or new fuel mandates, policies that could drive up costs for heat, hot water, and cooking fuel for Vermonters, especially in rural areas. The Council also proposes a massive public investment in weatherizing 79,000 additional homes, electrifying heating systems, and expanding charging infrastructure for electric vehicles.
Transportation Bill
Vermont’s FY2026 Transportation Bill (H.488) includes several provisions relevant to auto and truck dealers, particularly around electric vehicles, vehicle identification, and regulatory streamlining. Other parts of the transportation budget emphasize emission reduction strategies, vehicle miles traveled (VMT) policies, and alternative modes of travel—but of particular note is the state's continued investment in Drive Electric Vermont, funded with up to $325,000 to support EV infrastructure and education efforts. The law also includes minor but important “Dig Safe” changes that extend the timeline for marking underground utilities from 48 to 72 hours, for businesses engaged in excavation or facility work. Finally, the Agency of Transportation is tasked with evaluating local transportation aid systems, including how funds are distributed to towns for road and bridge work, a potential concern for dealers dependent on rural infrastructure.
DMV Changes
A new law (Act 69) makes numerous updates across Vermont’s motor vehicle and transportation statutes. It expands the definition of “pleasure cars” to include electric vehicles, clarifies documentation rules for enhanced driver’s licenses, and updates ID cards to reflect anatomical gift status. Former youth in state custody under age 23 receive broad fee waivers for licenses, IDs, and testing. The DMV is authorized to use J.D. Power values for vehicle tax assessments and is required to improve outreach, especially around REAL ID and non-REAL ID card options. Commercial and motorcycle instructor requirements are updated, and laws regarding CDL traffic violations, odometer tampering, and excessive speeding are clarified. Bicycle laws are modernized to include new signal rules and expanded educational efforts. Legal trails are reaffirmed as optional for municipal maintenance, and several minor statutory cleanups and clarifications are included. Click here for more details.
Sorting out Vermont Fees on EVs
The State of Vermont currently assesses an Electric Vehicle (EV) Infrastructure Fee in addition to the standard vehicle registration fee for all Plug-in Hybrid Electric Vehicles (PHEVs) and Battery Electric Vehicles (BEVs) registered in the state. Revenue generated from this annual fee ($44.50 for PHEVs and $89 for BEVs) supports the development and maintenance of EV charging infrastructure throughout Vermont. This system will remain in place until a Mileage-Based User Fee (MBUF) is implemented to reflect road usage by electric vehicles more accurately. The Vermont Agency of Transportation (VTrans) and the Department of Motor Vehicles (DMV) are actively working to implement the MBUF program for BEVs. The program is now tentatively scheduled to launch on January 1, 2027.
New Form for Used Cars
Effective July 1, 2025, Vermont law requires all used vehicle sellers to obtain a signed disclosure statement from the buyer. The disclosure form, approved by the Vermont Department of Motor Vehicles, must indicate the date of the vehicle’s most recent inspection and the expiration date of the inspection sticker. If the vehicle has not been inspected, that must also be clearly stated. Additionally, the form must inform buyers of their right to have the vehicle inspected by an independent mechanic at their own expense. Sellers must provide a copy of the signed disclosure to the buyer and retain a copy for their records. It does not have to be sent to the Vermont DMV.
