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Rate-setting and Impact Analysis for the Vermont Mileage-based User Fee
Nelson, Clare Rowangould, Gregory
Nelson, Clare
Rowangould, Gregory
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Attribution-NonCommercial 4.0 International
Abstract
This report outlines recommended rate setting methods for Vermont’s BEV pleasure car mileage fee as an interim step towards implementing a statewide mileage fee. We recommend a mileage fee approximately equivalent to what current gas and diesel pleasure car vehicle owners pay in state motor fuel taxes: 1.4 cents per mile. To preserve purchasing power, we strongly recommend indexing the mileage fee to a measure of inflation. Rather than incorporating the mileage fee administrative costs into the per-mile rate, we recommend increasing registration or inspection fees to cover any ongoing administrative costs. Overall, we find that a mileage fee set at a gas or diesel equivalent rate will, on average, increase BEV pleasure cars costs from the $89 per year fee at registration to an average of $158 per year (+ $69 annual increase). For comparison, the average Vermont light-duty gas or diesel vehicle pays $142 in state gas taxes annually. BEVs are expected to pay slightly more with a mileage fee than gas or diesel vehicles because, on average, they are currently driven more miles per year. While a mileage fee for BEVs begins to address transportation revenue decline, it does not account for the decline due to fuel economy improvements of gas and diesel vehicles. For this reason, we strongly recommend a quick transition to a statewide mileage fee program for all light-duty vehicles. We find average cost differences under a mileage fee for gas and diesel vehicles will be very small: on average, + $10 per year (due to rounding the fee from 1.36 cents per mile to 1.4 cents per mile). We also find many rural households will see cost savings by paying a mileage fee, as they are currently paying closer to 1.8 cents per mile on average in state gas taxes.
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Date
2026-02-25