A bill introduced in the Vermont Senate would fundamentally change how the state taxes gasoline and diesel fuel, with near-term and long-term financial implications for motorists. Sponsored by Senator Rebecca White (D-Windsor District), Senate Bill S.149 — An act relating to indexing the gasoline and diesel fuel taxes for inflation — was introduced on April 9, 2025, and referred to the Senate Transportation Committee, where it remains pending as of early 2026.

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What the Bill Would Do

Under current Vermont statute, a gasoline excise tax of $0.121 per gallon applies, along with variable assessments tied to the retail price of fuel, and a diesel excise tax of $0.28 per gallon. Those rates have been static and require legislative action to change.

S.149 would alter that framework by setting a $0.28 per gallon excise tax for both gasoline and diesel starting July 1, 2025, and then automatically adjusting those base rates annually for inflation. Specifically, beginning July 1, 2028, the tax on each fuel would increase each year by the percentage change in the Consumer Price Index for All Urban Consumers (CPI-U) over the preceding 12 months. If the CPI-U for a year is negative, the rate would stay flat — the bill does not provide for downward adjustments.

Proponents say indexing fuel taxes to inflation creates a predictable funding stream for transportation infrastructure and related programs and removes the need for annual legislative rate changes. Critics warn that inflation indexing amounts to a permanent automatic tax increase that could raise costs for Vermont households regardless of economic conditions.

Where the Bill Stands in the 2026 Session

The official Legislature status page shows S.149 has cleared its first reading and been assigned to the Senate Transportation Committee, but there is no publicly available record of committee hearings, fiscal reports, nor amendments as of January 2026.

Bills in Vermont typically remain in committee or move through hearings before being scheduled for a floor vote. At this point, there is no indication that S.149 has advanced out of committee or been formally scheduled for debate in either chamber.

Estimating the Financial Impact on Drivers

The most immediate impact of S.149 — if enacted in its current form — would be the increase of the gasoline excise tax from 12.1¢ to 28¢ per gallon starting July 1, 2025. That represents a net increase of roughly 15.9 cents per gallon on the state excise tax component, which would be passed through at the pump by fuel retailers.

For individual motorists, that excise increase translates into measurable annual costs:

• A driver consuming 600 gallons per year would pay about $95 more annually in excise taxes once the change takes effect.
• At 900 gallons per year, typical of a one-vehicle household with regular commuting, the increase is roughly $143 annually.
• Households burning 1,200 gallons per year could see nearly $191 more in fuel excise costs.

These figures do not include federal fuel taxes (currently about 18.4 cents per gallon), variable retail assessments, state sales taxes on fuel components, or market price fluctuations. State excise taxes are collected from vendors but are effectively passed on to consumers.

Statewide Revenue Implications

Using consumption estimates similar to those in prior fiscal briefings — approximately 283 million gallons of gasoline sold in a typical year — every one-cent increase in the gasoline excise yields roughly $2.8 million in revenue for transportation and related funds. By that calculation, a 15.9-cent increase could generate about $45 million annually before behavioral changes in consumption or cross-border fueling. That money would accrue to road maintenance and whatever statutory funds are designated under existing fuel tax distribution rules. (This estimate is based on typical consumption not official fiscal note data; as of early 2026, no fiscal note is posted for S.149.)

Inflation Indexing and Future Costs

The bill’s CPI-U indexing component would gradually ratchet fuel taxes upward over time if inflation remains positive. For example, a 3 percent annual CPI growth would increase the 28¢ base by about 0.84 cents per gallon in the first year of indexing, compounding thereafter. Over multiple years, this automatic escalation could add measurable expense to fuel costs for Vermonters without annual legislative vote.

Supporters argue this mechanism shields transportation funding from political volatility; opponents contend it locks in perpetual tax increases detached from wage growth or real gasoline price dynamics.

Public and Legislative Context

Public reaction and stakeholder testimony have not yet been widely reported in committee documents, and no committee hearings appear on the official status page. Because the bill remains in early committee stages in the 2026 session, its final form and prospects for passage remain uncertain.

For Vermonters tracking S.149, the next legislative steps, potential amendments, and fiscal analyses will be critical to understanding both the intent and the ultimate fiscal impact on households in a state where fuel costs already represent a significant operating expense.

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Dave Soulia | FYIVT

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