Fuel Tax Facts
On March 26, 2019, the Vermont House voted in favor of doubling the current Fuel Tax on heating oil, kerosene, dyed diesel and propane. The vote on the legislation (H.439) was approved 81 to 60.
How did my lawmaker vote? Click here to find out.
On March 27, the House voted (74-66) to exempt farmers and loggers from the Fuel Tax. Under current law, farmers and loggers are not exempt from Fuel Tax. However, non-profits such as hospital and churches are exempt from the tax, as are state and municipal governments. This may change! A separate piece of legislation in the House eliminates all exemptions from the Fuel Tax.
Here is what you need to know: A majority in the House wants to increase the Fuel Tax by 100%. The Senate will now decide whether to keep the tax at 2-cents a gallon, raise it to 4-cents, or increase it even more. To contact your Senator, click here.
The Senate will also consider whether to preserve the current exemptions or carve out new ones. The final decision will be made by Governor Phil Scott. To send a message to Governor Scott, click here.
If Governor Scott vetoes the tax increase, the Legislature can attempt to override and enact the tax increase into law without his signature. But 2/3 of all lawmakers must agree to raise the tax against his objection.
A 4-cent per gallon tax on heating oil, propane, kerosene and dyed (off-road) fuel will raise $9 million per year. The money pays for the low income weatherization program.
What is the existing law?
The 2-cent per gallon Vermont Fuel Tax is assessed on the sale of propane, heating oil, kerosene, and dyed diesel fuel delivered in bulk to a residence or business. Sales to the federal or state goverment— or local municipality or school district— are exempt from the 2-cent per gallon Fuel Tax. Sales from a pump and sales for re-sale are also exempt.
Other Taxes and Fees on Fuel
The 1-cent per gallon Petroleum Distributors Licensing Fee (PDLF) is paid on all gallons of heating oil, kerosene, and dyed diesel delivered in bulk. There are no municipal, agricultural, or manufacturing exemptions from the PDLF. The only exempt sales are those from a stationary pump and sales for re-sale. The PDLF is NOT assessed on sales of propane. Revenue from the PDLF goes to the Petroleum Cleanup Fund (PCF), which helps pay for pollution remediation and pro-active measures to reduce the occurrence of fuel spills.
The Vermont Sales Tax is applied to commercial sales of heating fuel. The tax also applies to sales of dyed diesel sold in bulk, if the fuel is for non-propulsion use. There are exemptions from the Sales Tax for dyed diesel used for manufacturing and agricultural purposes.
Vermont law allows fuels sellers to itemize the Fuel Tax, PDLF and Sales Tax where applicable.
VFDA's Fuel tax Compliance Bulletin and consumer information order form can be found here.