2026 Vermont Legislative Session Summary
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Vermont's legislative session closed on May 29 with a deal on the year's defining issue: education funding reform. While the student population has dropped from 110,000 to fewer than 80,000, spending has risen 40%. Efforts to bend the cost curve started with a standoff between the Governor and the legislature but ended in compromise. While the legislature and Governor agreed to drop calls for mandatory school mergers, funding decisions will shift from local boards to Montpelier through a new foundation formula. Regional committees will study consolidation.
While consolidation could lead to more efficiencies in the future, it does little in the near term. Which is why $100 million in surplus funds will be used this year to hold the average education property tax increase to roughly 3.5%, which is well below the 12%-plus originally projected. The yield bill sets the property dollar equivalent at $9,401, the income yield at $12,960, and the nonhomestead rate at $1.643 per $100 of equalized value. It is the second consecutive year lawmakers reached for one-time money to patch a structural problem.
Not everything that generated discussion this session made it to the finish line. Below is a summary of legislation of interest to Vermont businesses — both what passed and what didn't.
Small business programs preserved. The $9.38 billion state budget preserves funding for the Small Business Development Centers, the Small Business Law program, and the Rural Industry Development Program — all at risk in earlier negotiations. The budget also includes $12 million for a UVM multi-purpose center, a 5,000-seat facility replacing Patrick Gym and renovating Gutterson Fieldhouse.
S.327 eliminates the 2027 sunset on Vermont's Employment Growth Incentive, making the program permanent. The maximum incentive drops from $15 million to $10 million, but permanence is the headline. The bill also allows businesses to round cash transactions to the nearest nickel as penny production winds down. It heads to the Governor.
H.942 carves convenience stores out of Vermont's unit pricing requirements. The amendment defines a convenience store as a retail establishment selling motor fuel, tobacco, made-to-order food, snacks, and beverages — explicitly excluding grocery stores, drug stores, and dollar stores.
The legislature ran out of time, adjourning before final passage of H.740, which would have created a new fuel dealer registry. The legislation would have required fuel sellers to report where customers use the fuel they buy and for what purpose — information most distributors do not have and have no practical way to determine.
The Legislature passed a very limited prohibition on non-compete agreements. The only non-compete ban that made it to the Governor applies specifically to health care workers — not to nonexempt employees broadly. Legislation that would have extended that ban to hourly and lower-wage workers did not pass.
After two years of debate, Vermont has passed two data privacy bills. S.71 gives consumers rights to access, correct, delete, and obtain copies of their personal data, and to opt out of targeted advertising and data sales. No private right of action; most small businesses are exempt. H.211 expands the state's data broker laws, requiring companies that collect and sell personal information to register with the state.
Vermont's legislature moved to slow down the sweeping land-use changes enacted just two years ago. The measure (S.325) deletes the controversial road rule and Tier 2 and 3 provisions entirely. The bill preserves the pieces of Act 181 that have seen the most use — interim Act 250 housing exemptions covering projects up to 75 units in designated growth areas, 50 units near village centers or transit corridors, and unlimited units in downtown districts — extending those exemptions for another year through January 2028. Farm operations also get added clarity: stays, educational events, and agricultural gatherings are now explicitly exempt from Act 250 permit requirements, alongside existing exemptions for storage, sales, and processing. The net effect is a significant pause on the most contested parts of the 2024 overhaul while the state builds out new oversight mechanisms and waits to see how the Land Use Review Board develops.
Gov. Phil Scott vetoed H.727, which would have imposed strict guardrails on data centers using 20 or more megawatts — requiring facilities to bear all grid impact costs, maximize on-site renewables, limit combustion backup to emergencies, and prohibit PFAS discharge. Scott argued existing Act 250 and environmental permitting are sufficient and the bill would discourage investment.
Cell towers get more local input. H.527 extends Vermont's statewide telecom siting process through 2029, keeping cell tower projects within the Public Utility Commission rather than Act 250. New requirements: advance notice before filing, a mandatory preapplication public meeting that developers and the Department of Public Service must attend. It heads to the Governor.
New rules for lenders. Starting July 1, 2028, if a customer claims their vehicle loan was coerced, lenders must halt collections within 10 business days, complete an investigation within 30 days, and — if the claim is validated — forfeit any right to collect a deficiency balance after repossession. Gov. Scott has signed the bill. Lenders and vehicle sellers had raised concerns about fraud exposure and legal uncertainty. The dealers most likely to be affected are those that hold their own financing contracts or engage in buy-here-pay-here lending. For the average dealership, the practical effect will likely be limited to responding to lender or court requests involving vehicle transactions that are later alleged to be coerced debt.
Bottle bill fee increase passed. H.915 passed with the increased handling fee intact, estimated to cost distributors nearly $2 million. The Governor has not signed into law.
An overhaul of Career Technical Education (CTE) is in motion. S.313 sets sweeping intent for Vermont's career and technical education system: every student graduates with a post-high school plan; no student is wait listed out of a viable CTE program. The bill pushes flexible delivery — programs at sending schools or in hybrid formats. Long-term, the bill signals intent to integrate CTE and general education under one roof and one budget.
Act 97 gives Efficiency Vermont broader authority to spend thermal energy funds on fossil fuel reduction programs through 2029. The change introduces incentives for geothermal and air-source heat pumps. At least 60% of those funds must target weatherization and thermal efficiency; at least 60% of that weatherization spending must serve low- and moderate-income customers.
A new law requires anyone registering a business with the Secretary of State to disclose whether they operate as a franchisor or franchisee — and if a franchisee, to name the franchisor. The change takes effect January 1, 2027. It adds a disclosure layer to existing registration rules but imposes no new substantive obligations on franchise businesses.
Vermont's Transportation Fund continues to face a structural deficit. Revenues missed the forecast by $7.4 million this year. Construction costs are up more than 60% percent since 2020. The Agency of Transportation has already cut dozens of positions. The FY27 budget covers repaving just 46 miles of interstate and 56 miles of state highway. Roughly 30% of state roads are currently rated poor or very poor. Without structural change, that figure is projected to reach nearly 60% by the end of the decade.
This year's transportation bill makes modest changes to address these challenges. $1.7 million originally earmarked for town highway aid will be redirected to state paving, and the bill directs a study of bonding as a financing option to accelerate project delivery.
Over the past twenty years, a third of the purchase-and-use tax on vehicle sales has gone to the Education Fund — last year amounted to $50 million. Beginning next year, $10 million will be redirected back to the Transportation Fund.
A proposal to allow Vermont towns to adopt a second one-percent Local Option Tax dedicated to transportation — splitting revenue between municipalities and the state — generated significant discussion in committee but did not advance to passage. Thirty-eight Vermont towns already levy at least one Local Option Tax.
More money for roads will start coming from those who drive cars that don’t use gasoline. Starting January 1, 2027, battery-electric vehicle owners will pay 1.4 cents per mile, capped at $178 annually. This mileage-based user fee (MBUF) will replace the current $89 EV infrastructure fee. Plug-in hybrids, conventional hybrids, and all light-duty vehicles could be next, but that will be a decision for a future legislature.
The transportation bill also requires public EV charging station operators and charging network providers to share real-time data on charger availability, power delivery ratings, and pricing with third-party software developers, free of charge. The Secretary of Transportation would adopt rules to implement the requirement, including data format standards aligned with federal NEVI guidelines. A new EV Charger Regulation Working Group will identify gaps and barriers in Vermont's current charger laws, with a report due to the Legislature by December 15, 2026.
Vermont lawmakers arrived at the session ready to scale back vehicle inspections. Instead, they leave with something narrower. The DMV will revise its inspection manual, refocusing standards on safety. The Senate passed legislation limiting inspection failures to conditions that pose an immediate safety risk — non-immediate hazards would be treated as advisories rather than failures. A separate bill raised the question of biennial inspections for passenger cars; the Senate instead ordered a study. Data presented to the House Transportation Committee shows what inspectors are actually finding: OBD-related failures — onboard diagnostics not ready, check engine faults, scanner communication errors — dominate the top ten list. Brake inspections requiring wheel removal rank second. As part of the final legislation, the DMV must file both a proposed permanent revision to the Inspection Manual and an emergency rule by August 1, 2026, allowing the revised standards to take effect while the permanent rule making process is completed. The DMV will also need to update inspection procedures and provide guidance and training to Vermont inspection mechanics to ensure the new requirements are implemented consistently statewide.
A separate bill, S.326, clarifies that hands-free phone use is permitted in commercial vehicles if the device is not held, and aligns motorcycle inspection requirements with federal muffler standards. The bill also increases the fine for getting stuck in Smugglers Notch from $1K to $10K and from $2K to $20K if the vehicle substantially impedes the flow of traffic. The fines are doubled for subsequent offenses. If you’re a snowmobiler, make sure you have your registration and TMA stickers as the fine is being increased to $450 for the first offense and $500 for subsequent offenses.
A veto session is tentatively scheduled for June 22. However, lawmakers may not be called back. Meadow Hill will have further updates as bills are either signed or vetoed in the coming weeks.
Here is what did not become law.
A proposal (H.844) to apply the state's 6% sales tax to heating fuel delivered to second homes failed. It was rejected when energy advocates pointed out a practical problem: that fuel dealers have no way to know whether the home owner is living there for less than six months. The proposed fix — a public registry of second homes — created a new problem. It would amount to a state-published list of periodically vacant properties, useful to burglars as well as tax collectors.
H.845 would have created a Vermont personal income tax deduction to help offset the cost of purchasing snow tires, reducing the tax burden on motorists who equip their vehicles for winter driving conditions. It did not pass.
H.718 tried to expand Vermont’s building energy efficiency framework by directing the state to develop a residential building code for one- and two-family homes, strengthening oversight of contractors through improvements to the contractor registry, updating energy-efficiency education requirements for licensed professionals, and allowing municipalities to administer and enforce residential and commercial building energy standards. The bill passed the House but was stalled in the Senate.
H.161 would have expanded "right-to-repair" requirements by requiring manufacturers to make parts, tools, software, and repair information available to independent repair businesses and consumers. Supporters argued it would increase repair options and reduce costs, while opponents raised concerns about intellectual property, cybersecurity, and implementation challenges. The bill was discussed in committee but did not advance during the session.
An early draft of the transportation bill tasked the DMV with studying how vehicle history reports are created and whether they are accurate and reliable in used-vehicle sales. The review would have examined how data like accidents, ownership history, mileage, service records, and title information are collected and shared; how often errors or omissions occur; and how frequently consumers complain about inaccuracies. It also would have looked at why inaccurate or incomplete information shows up in these reports and whether state law or regulation could reduce those problems. The legislation failed to advance this session.
H.204 proposed a sweeping new tire recycling and stewardship program that would have imposed significant regulatory and reporting requirements throughout the tire industry. Dealers and other stakeholders raised concerns that the bill would add complexity, increase costs, and create new administrative hurdles with little clarity on implementation. The legislation failed to advance this session.
S.219 proposed creating a statewide energy navigator program that would provide residents with coaching and guidance on weatherization, electrification, and energy-efficiency upgrades. Critics questioned whether the proposal would add another layer of bureaucracy to an already crowded landscape of state-funded energy programs. The bill passed the Senate but failed to reach the finish line.
H.632 is a broad environmental cleanup bill that makes technical and administrative updates across multiple programs. Key changes include extending the battery stewardship assessment for EV and other hard-to-manage batteries from 2026 to 2027 and shifting responsibility for the study to the battery stewardship organization. It also revises eligibility for Vermont’s vehicle emissions repair assistance program by replacing LIHEAP-based qualification with income-based criteria and setting repair vouchers of up to $2,500 based on income and vehicle value. It did not pass.
H.766 proposed to create a new local option tax for municipalities to receive revenue from sales of gasoline and diesel fuel. The legislation failed to advance this session.
H.683 sets a statewide ban on public nudity with a carve-out letting towns explicitly allow it in designated places or events. The legislation failed to advance this session.
Bills that fail to become law will have to be reintroduced next session, after the November election.
The filing deadline for Vermont's August primary has passed, and nearly 30% of the House chose not to seek re-election. The most prominent departure is House Speaker Jill Krowinski. In the Senate, the picture is steadier — all but three incumbents are running again — but Senate President Phil Baruth is among those stepping aside. Vermont will have new leadership in both chambers when the Legislature convenes in January.