March 29, 2026

We have entered the decisive second half of the 2026 legislative session here in Montpelier. The final six weeks will be dominated by debates over property taxes, education spending, and transportation funding. Beyond these headline-grabbing battles, a quieter set of bills remains in flux — all could evolve quickly, stall without warning, or advance with little scrutiny. That's how the final stretch of the second year of a legislative biennium tends to go.

The political calendar is also beginning to assert itself. Candidates face a May 28 deadline to declare for the August primary — a moment when all 150 House members, 30 state Senators, and every statewide officeholder must decide whether to run again or step aside. It's also when potential challengers for all those seats begin to organize.

Taxing

House lawmakers approved a yield bill using nearly $75 million in one-time surplus funds to hold next year's average property tax increase to around 7%. While it is well below the 12% spike forecast in December, it is a temporary fix. The underlying math hasn't changed: education costs are growing about twice as fast as the revenues that support them, roughly 80% of spending is locked into salaries and benefits, and Vermont's per-pupil costs remain among the highest in the nation. Enrollment continues to fall, an aging population means a shrinking tax base, and the underlying education cost structure hasn’t changed.

Another bill (H.933) is moving through the State House that would redirect a larger share of Purchase and Use Tax revenue from vehicle sales to the Transportation Fund. Currently, a third of the roughly $150 million collected annually by new and used vehicle sellers flows to the Education Fund. The Governor proposed shifting all of it back to Transportation gradually over five years. The tax-writing committee is taking a narrower approach — moving 6% for next year only, which is a 73%-27% split between Transportation and Education. A last-minute attempt on Thursday to amend the bill by creating two additional income tax tiers failed. It would have increased state income taxes by 3% on household income over $500,000 a year, and by an additional 2% on income over $1 million. A preliminary estimate by legislative fiscal analysts indicates that the proposal could raise more than $110 million in new revenue annually. These tax bills now head to the Senate for further consideration.

Economic Development & Housing

The Vermont Senate unanimously passed S.327, an economic development package totaling more than $8 million in General Fund spending — roughly $4.2 million above the Governor's budget recommendation. The bill raises the cap on Downtown and Village Center Tax Credits from $3 million to $3.5 million starting in FY2027, makes the Vermont Economic Growth Incentive program permanent by repealing its 2027 sunset, and authorizes eight additional meetings for a Convention Center Task Force. Meanwhile, Vermont's new land-use law is drawing sharp criticism from rural landowners who say it effectively prices out home construction on their own property. The law's "road rule" triggers Act 250 review for projects requiring longer private roads — a common feature of large rural parcels — adding time, cost, and uncertainty to construction that was already difficult. Lawmakers are now weighing a delay in implementation until 2030. While some want to keep the restrictions in place, several hundred rural Vermonters protested on the State House steps, calling for a repeal. Legislation that passed the Senate (S.325) would delay the rule for three years.

Road Work

Vermont’s Transportation Fund faces a $33 million structural deficit — enough to put more than $150 million in federal matching dollars at risk. Construction costs are up 60% over the past decade, while revenues have barely moved. Without a structural reset, the consequences will show up on the road. Engineers say that by 2035, nearly half of Vermont’s pavement could be in very poor condition. The House passed a Transportation Bill that would charge battery-electric vehicle drivers based on miles traveled rather than fuel purchased. The Mileage-Based User Fee (MBUF) sets a rate of $0.014 per mile for EVs — calibrated to approximate the fuel tax gasoline vehicles pay, and estimated to cost a typical driver $150–$200 annually. If signed into law, the fee will take effect on January 1, 2027. The bill spells out the administrative machinery: billing schedules, payment options, an appeals process, and enforcement tools, including penalties, interest, and registration denial for nonpayment. State-owned and rental EVs are exempt, though the rental exemption is offset by a one-percentage-point increase in the EV rental tax, bringing it to 10%. A broader expansion of mileage-based fees to gasoline vehicles remains possible but is not expected for several years. The bill also allocates $192,000 to the Agency of Transportation for Drive Electric initiatives and authorizes $1.7 million in general state aid for town highways.

LOTs and PILOT Payments

About a dozen towns passed a 1% Local Option Tax (LOT) on Town Meeting Day, joining roughly 30 other municipalities where businesses must charge customers 7% sales tax instead of 6%. The new towns won't see the extra revenue until July 1 at the earliest — but more may follow. The legislature has made adoption easier, allowing a simple majority vote rather than a full charter change. Towns don't keep all the money. The state takes 25 cents on the dollar and deposits it into the PILOT Fund — Payment in Lieu of Taxes — which compensates municipalities that host state-owned property that pays no property taxes. The fund has built up a $15 million surplus, and the fight over that money is now open. The House Transportation Committee wanted 50% of each year's surplus returned to all municipalities as block grants for road repair. That died when Ways and Means claimed the fund to pay for property tax administration costs — lister training, valuation defense, reappraisal payments, and the equalization study used to set the statewide education property tax rate. The Senate may have an entirely different plan. It all gets sorted out in the next six weeks.

Plugged In

A wave of electric vehicles coming off lease could flood the used-vehicle market this year. The now-expired $ 7,500 federal tax credit made leasing electric vehicles more affordable, and EV lease deals subsequently soared over the past few years. Now, two- to three-year lease terms are ending, and EVs will make up almost 15% of off-lease used vehicles by the end of this year, up from 7.7% in the first quarter, according to Experian. Off-lease EV volume is set to peak in 2028, with nearly 800,000 vehicles entering the market. More than a million new EVs will sell this year, and nearly as many used ones will enter the market as leases expire. That shifts the customer base — and sends more drivers to public chargers. Utilization of public charging infrastructure is likely to increase.

Cold Comfort

A proposed Extreme Temperature Worker Protection Act would require Vermont employers to comply with new regulations whenever temperatures exceed 80 degrees or drop below 35. If the bill becomes law, employers would be required to purchase a “wet bulb globe thermometer” (retail price: $40) for each employee who spends more than 15 minutes outdoors and to provide a “heated space” for anyone who works outside. The state averages one complaint per year from Vermonters who work outside in the cold. After hearing testimony from Vermonters opposed to the legislation, it is unlikely to advance any further.

Vermont Climate Bill in Court

Vermont's Climate Superfund Act — which holds large energy companies liable for past greenhouse gas emissions and directs proceeds toward climate adaptation projects — faces a critical legal hearing on Monday, March 30 in Rutland federal court. Two challenges will be heard: one filed by the U.S. Chamber of Commerce and the American Petroleum Institute, joined by 24 Republican-led states; the other brought by the Trump administration. Both assert the law is unconstitutional and preempted by federal law, and both seek to strike it down before implementation proceeds. Appeals are likely regardless of the district court's ruling, with the Supreme Court a plausible destination. The law's ability to collect revenue is still unknown; collections cannot begin until litigation concludes.

More from Montpelier

The House gave its approval to legislation (H.740) that would create a "fuel registry" tracking gallons of heating and motor fuel sold in Vermont — at a cost of $500,000. The vote was 82–56. While this data is already available (check out the Vermont Heating Index here and the Motor Fuel Index here), the money would pay for more detail, not only on how many gallons of fuel are sold but also on where they are sold. Backers have been clear about what the registry is really for: it is a prerequisite for joining a carbon-pricing scheme, such as the Western Climate Initiative, that the Vermont Treasurer warned could add more than 80-cents per gallon to fuel costs. The bill is not law yet. It must pass the Senate and receive the governor's signature. A late amendment makes implementation contingent on FY2027 funding — if that appropriation is not included in next year's budget, the registry is put on pause.

The House voted 84–57 to expand mandatory energy education for licensed tradespeople. H.718 requires completion of a module of up to two hours covering how each trade intersects with energy codes, airflow, moisture management, and building systems — plus available state and utility incentives. First-time licensees will receive a general overview of Vermont's energy goals, a module that HCCV and VFDA instructors have offered since 2020. The updated modules, which must now cover energy codes, airflow, moisture management, and relevant incentive programs, take effect July 1, 2026. Beginning January 1, 2028, the state must review and refresh the content every three years. The bill now moves to the Senate.

The EPA finalized its long-awaited Renewable Fuel Standard "Set 2" rule, establishing the highest volume requirements in the program's 20-year history. Obligated parties must blend 26.81 billion RINs in 2026 and 27.01 billion in 2027 — levels EPA estimates will require biodiesel and renewable diesel production to rise more than 60% from 2025 levels. Conventional ethanol volumes hold steady at 15 billion gallons annually. The rule also reallocates 70% of volumes exempted under Small Refinery Exemptions for the 2023–2025 compliance years into the 2026–2027 obligation pool. Beginning in 2028, foreign feedstocks will generate only half the RIN value of domestic equivalents — a built-in advantage for American agricultural producers. The rule also strips EV charging stations of eligibility for RFS compliance, reversing a Biden-era policy that the EPA now considers inconsistent with the Clean Air Act.

EPA Administrator Lee Zeldin announced emergency waivers allowing E15 sales, citing energy market instability linked to conflict in Iran. The waiver takes effect May 1 and runs through May 20, with extensions possible. The agency is also removing barriers to E10 sales and waiving enforcement of state boutique fuel requirements, effectively creating a single national standard for gasoline blended with 9–15% ethanol. Vermont retailers planning to sell E15 must still comply with state and federal labeling rules. Vermont Weights and Measures regulations require EPA-mandated pump labels on any dispenser that sells fuel with more than 10% ethanol, and that product transfer documents accompanying each delivery identify the oxygenate content. Retailers should confirm pumps and paperwork are in order before May 1.

Vermont's Senate has passed a bill that would narrow the grounds for failing a vehicle inspection, shifting the focus from broad maintenance concerns to genuine safety hazards. Under the legislation, a car could only fail if a system or component poses an immediate safety risk. Conditions that aren't immediately dangerous but could become so would still be flagged as advisories rather than failures. A separate bill, S.211, raises the longer-term question of whether Vermont should move to biennial inspections for passenger cars — every two years rather than annually. The Senate stopped short of making that change, instead ordering a study and a report to lawmakers. They will likely use a recent peer-reviewed study that examined nearly half a century of crash data across all 50 states and found that mandatory vehicle safety inspection programs experienced approximately 5.5% fewer roadway fatalities per 100,000 registered vehicles than states without them. Inspections don't merely correlate with safer roads; they contribute to them. With roughly 30,000 Americans dying in road crashes annually, a 5.5% reduction represents thousands of preventable deaths. The study also notes that inspections will grow more important as vehicle technology advances.

The Cox Automotive Outlook points to an auto market caught between competing forces: modest economic growth and improving credit availability on one hand, and rising costs, global instability, and affordability pressures on the other. New vehicle sales are softening in 2026, down year-over-year as economic uncertainty, winter weather, and higher costs weigh on buyers. Used vehicle markets are holding up better, with tighter supply and stabilizing prices. Electrification continues to grow, led by hybrids, though consumer adoption remains gradual and price-sensitive. To see what Vermonters are driving, check out the Vehicle Index.

Now that the federal government has halted the production of pennies, lawmakers in Montpelier are considering a proposal that would ensure retailers are allowed to round up or down. H.837 will be discussed in the House Commerce Committee next week

H.915 passed the House. The bill creates a Producer Responsibility Organization — drawn from manufacturers and distributors — to manage Vermont's bottle redemption system. Retailers are watching one provision closely: the handling fee would be removed from statute and set by the PRO. It is now in the Senate for further consideration.

S.198 passed the Senate after it was scaled back. The original bill would have raised tobacco retailer license fees from $110 to $1,000— an amendment reduced the increase to just $40. The measure also increases fees on anyone selling without a license; the first offense is up to $2,000, and a second offense could cost $5000. The bill now goes to the House.

House lawmakers approved legislation (H.727) to require more regulatory reviews of data centers. The debate on the floor concerned how much electricity data centers require and their impact on the grid and energy costs. It now moves to the Senate

A proposal to apply Vermont's 6% sales tax to heating fuel sold to second homes appears to have stalled. The concept ran into a practical problem: fuel dealers have no reliable way to know whether a customer's property is a primary or secondary residence. One proposed fix — a public registry of second homes — raised concerns that it would create a roadmap for burglars.

Early IRS data show the average tax refund running 10.9% ahead of last year — $2,290 as of Feb. 6, versus $2,065 a year earlier. The increase reflects recent federal tax changes, including provisions eliminating taxes on overtime and tip income.

3 ATMs were stolen from Middlebury stores, according to WCAX. In all three cases, the thieves smashed their way into the buildings and hauled away the cash machines.

We've recorded 6904 heating degree days in Montpelier this winter 8% more than last year and in line with the twenty-year average.

Many Vermont towns require a permit for any truck over 24,000 pounds. Fuel trucks can get an exemption for $5 (or $10 for an entire fleet) with an annual town-issued permit. These permits must be filed before March 31 every year in every town that requires them. If you don’t have a permit, you could be liable for thousands of dollars in fines. This has nothing to do with mud season. This is an annual permit required in certain towns. Go to vermontfuel.com/weight for more information on what is required when driving a truck on town roads.

Vermont DMV Commercial Vehicle Enforcement inspectors recently stopped four passenger vehicles on Interstate 89 clocked at 100, 105, 107, and 112 miles per hour. At those speeds, stopping distances multiply and reaction time collapses. The division has signaled that excessive speeding will remain an enforcement priority.

Your tax dollars paid for them. Now you can buy them back, slightly used, at the Vermont State Surplus Property Auction. See what's for sale here.

Entertaining tales deliver gifts of warmth at recent storytelling event in Williston.

March 22, 2026

THE CROSSOVER

Vermont lawmakers have crossed the halfway mark. With the crossover deadline behind them, the field is narrowing—what survives now has a real shot at becoming law. All of it unfolds under the shadow of November elections, with candidates facing a May 28 filing deadline for the August primary.

Property taxes remain the central pressure point. Lawmakers used roughly $75 million in one-time funds to hold next year’s increase near 7%—well below earlier projections, but only temporarily. The underlying imbalance persists: education spending is growing at roughly twice the rate of revenue, about 80% of costs are fixed in salaries and benefits, and per-pupil spending remains among the highest in the country. Enrollment is declining, and the tax base is aging.

ICE HEARING

Testimony on last week’s South Burlington immigration raid pointed to a familiar pattern: outside agitators, not peaceful protesters, drove the escalation. Burlington Interim Police Chief Shawn Burke described a “Trojan horse” dynamic. At the same time, local law enforcement has drawn a clear line with federal officials, criticizing ICE’s execution of what was otherwise a judicially authorized operation.

STRAIT TALK

Energy markets are reacting sharply to conflict in Iran. The effective closure of the Strait of Hormuz—through which roughly 20% of global oil and LNG flows—has tightened supply chains and lifted prices across fuel and commodity markets. A 60-day Jones Act waiver is intended to ease domestic bottlenecks by allowing foreign vessels to move goods between U.S. ports. It will help move product from the Gulf Coast to the East Coast, but it does not resolve the global supply constraint.

MBUF: PAY BY THE MILE

Lawmakers are advancing a mileage-based user fee for electric vehicles, set at $0.014 per mile—roughly equivalent to fuel tax contributions. The typical driver would pay $150 to $200 annually. The program is slated to begin January 1, 2027, alongside a modest increase in the EV rental tax to 10%. A broader expansion to gasoline vehicles is likely years away.

DEGREE DAYS

Montpelier has recorded 6,663 heating degree days this season—about 8% above last year and near the long-term average.

MONTPELIER NOTEBOOK

Lawmakers are revisiting how vehicle tax revenue is split. Roughly one-third of the $150 million collected annually now supports education. The Governor proposed shifting it entirely to transportation over time. Legislators are considering a smaller adjustment—moving 6% next year, creating a 73%-27% split.

A $33 million structural deficit in the Transportation Fund threatens more than $150 million in federal matching dollars. Construction costs have risen 60% over the past decade, while revenues have stagnated. Without reform, road conditions will deteriorate, with nearly half of pavement projected to be in poor condition by 2035.

A proposal to apply the sales tax to heating fuel for second homes has stalled. Dealers cannot reliably determine residency status, and a proposed registry raised concerns about privacy and security.

Lawmakers are moving forward with a $400,000 plan to restart the state’s contractor registry and expand energy-efficiency training requirements. A separate $500,000 proposal would create a fuel sales registry—not to track gallons, but to support a future cap-and-invest program that would impose fees on fossil fuels.

March 2, 2026

Montpelier is quiet this week. Town Meeting Day has the spotlight, and legislators are home while Vermonters vote on school budgets and selectboard races.When lawmakers return, they will have roughly three weeks to decide what new taxes, spending programs, and regulatory changes survive the session. The next stretch will determine the fiscal trajectory of Vermont heading into 2027.

Taxing Questions

Property Tax Math Nearly half a billion dollars may be necessary over the next three years to keep Vermont property tax increases to just 5%, according to data from the nonpartisan Joint Fiscal Office. This "buy-down" of property taxes in recent years has softened the blow of rising education costs, making the annual increases less severe than they otherwise would have been. If the legislature can shift about $100 million in General Fund revenues into the Education Fund this year, property tax increases could be held to about 4%. But relying on surplus funds this way means other needs in state government could go unmet. And if there are no surplus funds, spending cuts will have to come from somewhere.

Thanks a LOT On Vermont’s annual Town Meeting on Tuesday, voters will be deciding more than school and municipal budgets — many communities will also weigh new local option taxes, also known as LOTs. Nearly 20 cities and towns are asking voters to adopt a 1% local option tax on rooms, meals, alcohol, and sales, layered on top of existing state taxes. Vermont currently taxes sales at 6%, rooms and meals at 9%, and alcohol at 10%. State tax data show that the additional 1% collectively generated roughly $50 million in local revenue last year. About three dozen municipalities already levy at least one local option tax (LOT), and that number could soon grow.

LOTs for Roads The legislature may give towns greater authority to raise revenue. Stowe is seeking to double its local option tax to 2%, which would require a charter change and legislative approval. New legislation could make that easier by allowing municipalities that already levy a LOT to add a second 1% tax dedicated to road maintenance without a charter amendment. Proposals to extend the tax to gasoline and diesel are also being discussed, though those would require further legislative action and local approval.

New Category Changes to Vermont’s property tax classification system could be coming soon. Under one proposal, the current “nonhomestead” category could be split into a Nonhomestead Residential Rate (which includes second homes and short-term rentals) and a "Nonhomestead Nonresidential Rate" (which includes businesses, long-term rentals, and open land). Data collection would occur before rate multipliers are set, likely during the 2028 legislative session for fiscal year 2029 implementation.

Hitting High Earners Vermont legislators are considering a package of proposals that would significantly increase taxes on those with higher wages. H.621 would create two new top income tax brackets — 11.75% on income above roughly $500,000 and 13.75% on income above $1 million for joint filers — and would apply retroactively to January 1, 2026. On the Senate side, S.282 would create a new 4% Wealth Proceeds Tax on dividends, capital gains, and rental income for individuals earning over $200,000 (single) or $250,000 (joint), modeled on the federal Net Investment Income Tax. Also being discussed: a doubling of property taxes on second homes and rental properties. The hesitation is that Vermont's highest earners are mobile — and already pay a disproportionate share of state income tax. Revenue models may be static, but taxpayers are not.

One More Time The Federal Motor Carrier Safety Administration (FMCSA) issued ANOTHER extension to the Regional Emergency Declaration. This extension allows truck drivers and motor carriers delivering emergency relief supplies — including heating oil, propane, gasoline, diesel, and other essential products — to operate with greater flexibility. Vermont is one of the states included in the regional declaration which is good until March 14.

Inspecting the Inspectors

The Vermont Senate Transportation Committee held a public hearing earlier this week on proposed changes to the DMV Inspection Manual and S.211, legislation that would shift Vermont from annual to biennial motor vehicle inspections. Fourteen members of the public testified. Supporters of the current annual system argued that a vehicle passing inspection today may not remain safe for two years, and that Vermont's deteriorating roads make inspections more critical than ever. Backers of the two-year cycle countered that many states require no safety inspections at all.

Vermont inspection data suggests that emissions inspections drive vehicle maintenance and play a role in improving compliance, getting vehicles repaired, and achieving air quality benefits. While the two year inspection language did not make it out of committee yet, the legislation moving forward mandates a significant overhaul of the DMV inspection manual, requiring that vehicles only fail for defects posing an "immediate safety risk," with emergency rules due by August 1, 2026. Additional provisions tighten license plate display laws — prohibiting any tinting or covering of plates — and require that motorcycles manufactured after 1985 carry a federally compliant muffler stamp or face a failed inspection.

Paying by the Mile

Vermont's proposed Mileage-Based User Fee (MBUF) would charge battery electric vehicle owners $0.014 per mile — adjusted annually for highway construction inflation — to ensure they contribute to the Transportation Fund at roughly the same level as gasoline-powered drivers via the fuel tax. BEV owners would report mileage annually or at ownership transfer, with penalties for late reporting or payment. The Agency of Transportation would administer the program, including contracting with an account manager, auditing records, and entering agreements with other jurisdictions. Plug-in hybrids would continue paying existing EV infrastructure fees rather than the new mileage charge. Some lawmakers have floated extending the MBUF to all vehicles, not just electrics, though that is not currently under consideration. Others want both the MBUF and the gas tax indexed to inflation, so rates rise automatically without requiring a legislative vote.

Capping Which vehicles and trailers qualify for Vermont's "Max Tax" is under review in Montpelier. The Max Tax caps the state's 6% Vehicle Purchase and Use Tax for certain heavy trucks and trailers at $2,486 — vehicles under 10,100 pounds pay the full 6% with no ceiling. A January 2026 DMV rule change shifted how the cap is calculated, using a truck's empty weight rather than its registered or loaded weight. A compromise proposal would base eligibility on the manufacturer's Gross Vehicle Weight Rating. A further amendment would preserve the cap for working trailers while subjecting trailer coaches to the full 6%. However, the Senate Transportation Committee pumped the brakes on this change, pending an analysis of the tax impact on Vermonters.

Fuel Trackers Legislation (H.740) passed the House Energy Committee on Friday by a vote of 6-3. It spends half a million dollars tracking gallons of fuel as it is bought and sold in Vermont. Much of the data can already be found for free. Check out the Vermont Heating Index and Vermont Fuel Index, which is updated every month.

Road Fix Vermont's sweeping 2024 land-use reform law is running into implementation trouble. Transition deadlines, ambiguity around Tier 3 jurisdiction, and the controversial "Road Rule" — which can pull routine projects into full Act 250 review based on roadway length alone — risk slowing housing production and complicating municipal planning. The Rural Caucus has introduced legislation to slow the rollout and address unintended consequences.

February 16, 2026

The Cost of Standing Still

Vermont businesses are pushing back against a permitting system they say is too slow, too layered, and too costly. Jose Oliver, who owns automobile dealerships in Rutland and Bennington, traveled to Montpelier to describe firsthand the obstacles businesses face when trying to expand. Lindsay DesLauriers, president of Bolton Valley Resort, echoed those concerns, describing a building project delayed by avoidable procedural hurdles. Their message was direct: when businesses are ready to invest capital, hire workers, and grow, the state should not stand in their way. Permitting reform is not a marginal issue — it is central to Vermont's economic future.

Vermont's demographic decline is accelerating. New U.S. Census estimates show the state recorded the largest percentage population loss in the country. More than 1,800 residents left, driven by an aging population and continued out-migration. Vermont is the only state experiencing both natural population loss and negative net migration simultaneously. By 2030, roughly one in three Vermonters will be over 65. Fewer workers, fewer students, and rising health-care costs will strain the tax base. Decades of constrained development have left Vermont with one of the oldest housing stocks in the nation, worsening affordability at the wrong time.

Building More, Faster

Lawmakers in Montpelier are looking at new tools to spur housing production and economic development. H.775 would freeze property values for new development projects and allow special assessment bonds to finance infrastructure. Lawmakers are also working to align local housing goals with statewide targets and advance an off-site construction pilot program. Separately, there is strong legislative support for removing the sunset on the Vermont Employment Growth Incentive (VEGI), preserving access to one of the state's most effective economic development tools.

Controlling the Cost of Education

Vermont's education spending crisis is forcing difficult tradeoffs. S.220 would impose temporary caps on school district budget growth for fiscal years 2028 and 2029, using a formula tied to prior spending, inflation, and comparisons with high-spending districts. Lower-spending districts would have more room to grow than higher-spending ones.

The two-year cap appears designed as a bridge measure — slowing property tax increases while state officials develop longer-term reforms. But the approach shifts meaningful budget authority from local voters to state-level oversight, a move that runs counter to Vermont's tradition of local school governance.

Voters in two small Vermont towns recently chose to keep their local elementary schools open rather than consolidate with neighboring districts. Vermont's network of small, locally controlled districts is costly to sustain as enrollment declines and the population ages. Yet efforts to impose state-level consolidation consistently meet resistance from communities unwilling to surrender control over their schools, even as property taxes rise to support them. The question is whether temporary spending caps can bend the cost curve without resolving the underlying structural mismatch between Vermont's school system and its demographic reality.

Vehicle Inspections Under Scrutiny

New Hampshire's vehicle inspection program has been suspended until further notice. The state's Department of Justice and Department of Safety announced that inspection stations are no longer authorized to issue state inspection stickers, and vehicles are not currently required to obtain an annual inspection. Drivers remain legally responsible for ensuring their vehicles are safe to operate. Vermont lawmakers are also examining inspections, as compliance has dropped off. Nearly 593,000 vehicle inspections were completed in Vermont in 2019, compared to fewer than 496,000 in 2025 — a decline of more than 16%. Recent inspection data show brake-related issues as the most common failure point, with rotors cited in 45% of cases. Tire and steering problems each appeared in 36% of failures. The typical inspection costs drivers between $60 and $100. Rather than eliminating inspections or moving to a biennial schedule, Vermont lawmakers appear inclined to modernize the inspection manual to reflect changes in vehicle technology and safety systems.

Higher Taxes for High Earners

Lawmakers are debating whether to create two new income tax brackets targeting Vermont's highest earners. H.621 would increase rates on individuals earning more than $500,000 per year. Vermont already leans heavily on a small number of high-income residents who contribute a disproportionate share of state income tax revenue. Adding new brackets risks encouraging the departure of taxpayers the state can least afford to lose, particularly at a time when population decline is already straining fiscal capacity.

Fuel Bills

Several proposals under consideration in Montpelier focus on fuel sales and fees. H.863 would establish a 30-cent fee on most retail deliveries in Vermont while enabling municipalities to adopt a local option tax of up to 1% on gasoline and diesel sales, contingent on voter approval. If enacted, the local fuel tax could create inconsistent pricing across municipal boundaries, driving up motor fuel costs and complicating operations for distributors who serve multiple markets. The proposal also presents a structural challenge: Vermont currently assesses its motor fuel excise tax at the distributor level when fuel enters the supply system, rather than at the point of sale.

And then there is H.740, which would create a fuel dealer registry for all fuel sold. The point is to gather more data on sales of gasoline, diesel, heating oil, and propane in Vermont. While details on how many gallons are sold are easily found (check out the Vermont Motor Fuel Index and the Heating Index at VermontTEN.org), the legislation would require dealers to report sales by county and indicate whether the fuel is used for residential, commercial, or industrial purposes. Another bill (H.814) would provide grants to gas stations for installing EV chargers—but with a twist. The bill encourages stations to transform into social hubs with nightclubs, yoga studios, and saunas.

Notch Fines

Vermont lawmakers are considering a substantial increase in penalties for drivers who take oversized vehicles through Smugglers' Notch, a narrow mountain pass in Lamoille County that is clearly posted as off-limits for large trucks and buses. Under the proposal, the fine for a first offense would rise to $10,000, with the penalty climbing to $20,000 for vehicles that substantially impede traffic.

Purchase and Use Tax Shift

The House Ways and Means Committee is weighing a proposal to redirect more of Vermont's vehicle purchase and use tax revenue into the Transportation Fund. Under current law, a third of the approximately $150 million collected from vehicles sales flows to the Education Fund rather than to transportation infrastructure.

Case Closed. For Now.

Vermont's Clean Heat Standard (CHS) will not move forward as proposed. The Public Utility Commission formally closed the case, concluding it lacked clear legislative authority to implement the regulation, which would have required fuel dealers to generate or purchase clean heat credits to offset fossil fuel sales.

The Commission has cited several concerns with the CHS, including projected program costs totaling roughly $955 million over its first decade, a regressive cost structure disproportionately burdening low-income households, and significant administrative complexity involving credit trading, verification, and multi-party coordination.

The Commission ultimately advocated for simpler approaches leveraging existing state programs, leaving the CHS's future subject to further legislative review.

Fuel Oil Keeps the Lights On

Heating oil proved its value as a critical energy backbone across New England during an extended stretch of intense cold this winter. A newly constructed transmission line through Maine connecting the region to Canadian hydropower was taken offline after extreme demand in Quebec forced the utility to prioritize its own customers. With that electricity supply cut off, power companies relied heavily on fuel oil and natural gas to keep power generation plants running.

February 1, 2026

Vermont’s Demographic Reality

Vermont is facing a demographic crisis defined by a rapidly aging population and stagnant population growth. As older residents leave the workforce, the state’s labor pool is shrinking, while demand for health care and social services continues to rise. This imbalance places growing pressure on employers, public finances, and essential service delivery across the state.

At the same time, Vermont’s permitting and land-use system continues to constrain housing production, worsening affordability and limiting the state’s ability to attract and retain working-age residents. Housing scarcity is now a central driver of workforce shortages, particularly in construction, energy, health care, and skilled trades.

Climate Mandates vs. Economic Reality

Vermont law requires greenhouse gas emissions to be reduced by 40 percent by 2030 compared to 1990 levels under the Global Warming Solutions Act. This mandate is in conflict with Vermont’s demographic and economic needs.

The Climate Council adopted emissions-reduction “Pathways” developed by the Stockholm Environment Institute that assume zero population growth. This assumption is fundamentally at odds with Vermont’s stated goals of economic vitality, affordability, and workforce stability. Vermont’s shrinking population growth may reduce emissions on paper, but in practice, it leads to labor shortages, higher costs, and the decline of rural communities.

Growth Is Not Optional

According to the Vermont Futures Project's analysis, the state must grow its population by approximately 155,000 residents by 2035—roughly 12,900 per year—to sustain its workforce and economy. Meeting that growth will require tens of thousands of new homes, far exceeding current housing production rates.

The Governor’s proposed $9.4 billion budget reflects concern that revenue is largely flat and barely keeping pace with inflation. Spending pressures in education, healthcare, and transportation are rising far faster. Transportation revenues are projected to grow by less than 2%, even as construction costs have increased by roughly 60% over the past five years. Compounding the challenge, is the potential loss of federal funds, as well as Medicaid-related reductions that could push more healthcare costs onto the state budget.

These fiscal constraints are inseparable from Vermont’s underlying demographic trends. By 2030, roughly one in three Vermonters will be over the age of 65, a shift that affects nearly every major policy debate in Montpelier. Fewer students mean declining enrollments and difficult education funding decisions. An aging population also brings higher healthcare costs. At the same time, workforce growth remains sluggish, limiting the state’s ability to expand its tax base without increasing the burden on existing taxpayers.

Housing sits at the center of these challenges. Vermont has the second-oldest housing stock in the nation, the product of decades of constrained development and rising construction costs. Limited housing supply makes it harder to attract workers, expand the tax base, and stabilize long-term tax revenues.

There are tools on the table that could help bend the curve. The Community and Housing Infrastructure Program (CHIP) allows communities to access up to $200 million in tax increment financing per year over the next decade to support housing-related infrastructure. Lawmakers should also permanently remove the sunset on the Vermont Employment Growth Incentive (VEGI), one of the state’s few statewide business incentives, which is currently set to expire at the end of the year.

Transportation Fund Under Strain

Vermont’s Transportation Fund remains structurally imbalanced after years of diverted revenues and stagnant fuel tax growth. Vermonters purchase roughly $2.4 billion in vehicles each year, generating about $144 million from the 6% Vehicle Purchase and Use Tax. Most goes to the Transportation Fund to repair our roads and bridges, but a third (about $50 million) is diverted to the Education Fund. Lawmakers are debating whether to redirect it back to its original purpose, a move supporters argue would improve long-term funding stability of the transportation fund.

A Move to MBUF

Searching for more money for the transportation fund, Vermont lawmakers are laying the groundwork for a mileage-based user fee — also known as MBUF. The initial proposal would apply only to electric vehicles, replacing the flat EV fee with a per-mile charge using odometer readings rather than GPS tracking. While officials say broader expansion is not imminent, decisions made in the next few months could shape whether MBUF becomes Vermont’s long-term transportation funding model.

Second-Home Fuel Tax Could Complicate Deliveries

The Vermont Senate is considering legislation that would require heating fuel dealers to verify whether a delivery address is a customer’s primary residence. Under S.274, fuel delivered to second homes would be subject to the 6% sales tax, requiring dealers to consult a state tax database before delivery or face liability for the 18 to 20 cents-per-gallon tax on heating fuel. Dealers warn the proposal shifts tax enforcement responsibilities onto fuel suppliers, increasing compliance costs and slowing service—particularly during peak winter demand.

New Registry Proposal

Legislation known as H.740 would create a new fuel-sales registry, requiring suppliers to report gasoline, diesel, heating oil, kerosene, and propane sales by county. The proposal would spend roughly $800,000 on a data-collection system that mirrors the abandoned Clean Heat Standard registry.

Shrinking the “Max Tax”

In Vermont, the “max tax” is the statutory cap on the 6% Vehicle Purchase and Use Tax for certain vehicles. Purchasers pay 6% of the taxable cost, with no cap, if their car or truck weighs less than 10,099 pounds. Anything over is taxed at 6% of the taxable cost or $2,486, whichever is less. That is the current max tax. As of January 1, 2026, the cap is determined using a truck’s empty, as-delivered weight, rather than its registered or loaded weight. While intended to align tax administration with statute, this change may increase tax exposure for commercial fleets, dealers, and contractors purchasing heavier vehicles. Lawmakers are also considering removing trailers and fifth wheels from eligibility for the cap, subjecting them to the full 6% purchase-and-use tax rather than the $2,486 maximum.

Vehicle Inspections

Legislation proposing biennial vehicle inspections has returned to the Vermont State House, reviving a long-running debate over safety, cost, and regulatory burden. Supporters argue that modern vehicles and improved diagnostics make annual inspections unnecessary, while opponents warn that fewer inspections could increase safety risks and reduce oversight of older vehicles. The proposal follows New Hampshire’s elimination of passenger vehicle inspections as of February 1, 2026.

January 2026

Tax, Health Care & Education Funding Reforms

The 2026 legislative session will be consumed with another round of sobering fiscal updates. Vermont is staring down an estimated 12% increase in education property taxes next year unless lawmakers once again intervene by finding a way to add money to the Education fund, or if school boards across the state find significant cost savings in Town Meeting day budget votes. Rising personnel costs, inflation, and aging school facilities drive the state’s education system financial strain and property tax increases. Over the past two decades, K–12 enrollment has declined by 16%, yet education spending has increased by nearly $1 billion. Since property taxes are the primary funding source for public education, that has had a dramatic impact on taxes paid by homeowners and businesses.

Vermont’s health care affordability crisis is also coming into sharper focus. New analyses show Vermonters now spend nearly 20% of their income on health care, compared with a national average of 8%. Business leaders highlighted stark differences between Vermont and neighboring states. For small employers in Vermont, a silver-level plan for a five-person company costs more than $8,500 per month. The same plan costs roughly $5,000 in New Hampshire. These widening cost gaps are putting pressure on both families and employers and have become a top concern heading into the legislative session.

Planning for Action

The Vermont Climate Council has updated its Climate Action Plan, and lawmakers are expected to hold a series of hearings to review it in January. The original plan contained more than 250 recommendations; the revised version narrows that list to 52 priority actions. Most focus on encouraging more Vermonters to drive electric vehicles and install electric heating systems.

Even with a slimmer list, the challenges remain enormous. The plan assumes Vermont can raise new revenue without increasing energy costs, develop a workforce it does not currently have, build a significantly expanded charging and electrical infrastructure, and implement dozens of major initiatives in just four years. Under current law, anyone may sue the state if the plan is not followed and emission-reduction mandates are not met, forcing regulatory action. Lawmakers are unlikely to change that law—but they will have to fund it. And that accounting comes with a price tag: $300,000 for staff, $300,000 for new software, and $200,000 to verify the data—before any emissions are actually reduced.

Meanwhile, the Public Utility Commission (PUC) released its Act 142 energy cost stabilization report, concluding that Vermont does not need any new statewide energy programs. Transportation accounts for 45% of household energy costs, followed by heating at 35% and electricity at 20%. Existing programs—LIHEAP, Crisis Fuel, Weatherization, efficiency initiatives, and EV incentives—are effective but underfunded. The PUC recommends increasing the two-cent-per-gallon fuel tax on heating fuels to expand weatherization and adding General Fund dollars to strengthen fuel assistance. For transportation, the report urges renewed funding for incentives for new and used electric and plug-in hybrid vehicles.

Transportation Revenue Flat, Costs Up

Vermont’s Transportation Fund faces a growing structural deficit fueled by rising expenses and stagnant revenues from vehicle sales and fuel taxes. T-Fund revenue is projected to grow just 1.3% annually through 2030—well below inflation. Beginning in FY 2027, Vermont is expected to face a $30–$35 million shortfall in required state matching funds, putting $160–$220 million in federal transportation dollars at risk. Gasoline and diesel receipts have held steady in recent years but are unlikely to grow as vehicles become more efficient.

While the 6% Purchase & Use Tax is tied to the price of vehicles, it has also flattened due to declining auto sales. Currently, one-third of the Purchase and Use tax on vehicles is diverted to the Education Fund; legislation has been proposed that would return those dollars to their original purpose—repairing Vermont’s roads and bridges.

Pumping Up

The Vermont Public Service Department has hired Ridgeline Analytics to study how heat pumps are actually being used in Vermont homes and small businesses. The project updates the state’s 2017 evaluation of cold-climate heat pumps, which focused largely on mini-split systems. This new analysis will also examine newer multi-head and central heat pump installations. As part of the study, researchers will track real-world heat pump usage over a full year by Vermont residents and small businesses.

Efficiency Vermont has released a "Residential Heat Pump Action Plan" to accelerate the adoption of electric heat pumps in the residential sector. EVT is predicting a 15–30% reduction in sales, based on the ending of federal tax credits. The plan focuses on space heating and identifies market barriers such as upfront costs, contractor capacity, consumer awareness, and performance concerns in cold climates. It proposes expanded incentives, education, workforce training, technological improvements, and regulatory support to address these challenges. While the plan positions heat pumps as a central tool in Vermont’s emissions-reduction strategy, questions remain about their ability to fully and reliably reduce oil and propane consumption, particularly in older homes and during peak winter demand.

California Cars and Vermont’s Emissions Mandates

This may be the year Vermont’s web of vehicle emissions regulations finally gets sorted out. In 2012, the state adopted the Advanced Clean Cars (ACC I) regulation, which applied to vehicle model years 2015 through 2025. First adopted in California and more stringent than federal standards, ACC I encouraged automakers to reduce tailpipe emissions and sell vehicles that burn less gasoline, while also increasing sales of electric and plug-in hybrid vehicles.

ACC I was later replaced in California and Vermont by Advanced Clean Cars II (ACC II), which requires automakers to sell increasing numbers of battery-electric vehicles beginning in 2026 and ultimately bans the sale of new internal combustion engine vehicles by 2035. However, Governor Phil Scott issued an executive order directing state agencies not to enforce Vermont’s ACC II sales mandates through December 31, 2026.

And then last summer Congress approved — and President Trump signed — a Congressional Review Act resolution overturning the EPA waivers that allowed California and other states, including Vermont, to adopt EV mandates. Vermont’s Attorney General has since joined a multi-state lawsuit seeking to preserve that authority.

As a result, it remains unclear whether Vermont reverts to federal standards or the prior ACC I framework. That decision will directly affect which vehicles can be sold and registered in Vermont. For example, the 2026 Ford Escape, Lincoln Corsair, Dodge Durango R/T (392), and Durango Hellcat meet federal standards but do not have ACC I certification.

At a recent meeting of the Vermont Climate Council, the Agency of Natural Resources signaled its intent to pursue rulemaking to continue enforcing the prior ACC I standard rather than defaulting to the less stringent federal rules. When that occurs — and how it interacts with ongoing litigation — remains unresolved.

How Heavy Equipment Drives the State’s Rural Economy

From tractors and skidders to loaders and excavators, heavy equipment powers Vermont’s rural economy. These machines support the state’s $5 billion dairy industry, the $1.5 billion forest products sector, and the construction projects that keep rural infrastructure functioning. Skilled Vermonters—and the local equipment dealers who train and support them—ensure this machinery operates safely and reliably.

Over the past year, lawmakers visited dealerships and shop floors across Vermont to better understand modern equipment and the potential impacts of proposed “Fair Repair” legislation. What they observed firsthand was clear: today’s agricultural, forestry, and construction machines are highly sophisticated systems integrating software, encrypted diagnostics, emissions controls, and precision technologies. Maintaining them requires extensive training, certification, and secure, manufacturer-supported tools.

The visits highlighted the substantial investments dealers make in technician training, diagnostic infrastructure, and safety standards—investments that support reliable service, good-paying jobs, and workforce development in rural communities. Dealers raised concerns that the Fair Repair Act, which would mandate access to proprietary parts, tools, and software, could have unintended consequences. These include increased safety and cybersecurity risks, emissions compliance challenges, warranty complications, and liability provisions that shift risk onto equipment owners. Dealers emphasized their support for timely repairs and customer choice, while urging lawmakers to pursue solutions grounded in the realities of modern machinery and Vermont’s rural economy.