Vermont's annual transportation budget in FY2025 was $879 million. The Federal governmemt covers approximately 54% of transportation funding, primarily for capital projects through programs like the Federal Highway Administration. Fuel taxes, the Vermont vehicle purchase & use tax and DMV fees cover the rest.
As traditional revenue sources like fuel taxes decline with the rise of electric vehicles (EVs), Vermont is considering other ways to sustain its transportation infrastructure. Vermont lawmakers are exploring three potential revenue options: modifications to the gas tax, a mileage-based user fee (MBUF), and a retail delivery fee. These proposals are in the early stages, with policymakers evaluating feasibility, economic impact, and public reception.
The "gas tax" currently consists of a fixed and variable component, with rates set quarterly based on distributor sales. Despite being one of Vermont’s primary transportation revenue sources, inflation-adjusted gas tax levels are at historic lows, and the last increase occurred in 2014. With about 30% of gas tax revenue coming from out-of-state drivers, a shift away from this model could place a greater burden on Vermonters. Legislators are also considering regional collaborations to maintain revenue stability.
As gas tax revenue declines, a "mileage-based user fee (MBUF)" is under consideration. This per-mile charge would initially apply to electric vehicles before expanding to all vehicles. However, concerns over implementation costs, privacy, and fairness—especially for lower-income drivers—remain significant.
A "retail delivery fee" is another option, charging a flat fee per order to generate revenue from commercial deliveries. If implemented at 30 cents per order, it could generate approximately $10 million annually. Lawmakers continue to assess the economic and administrative impact of these options before advancing them in the legislature.