How Vermont Taxes Diesel Fuel

1. Vermont diesel fuel tax applies to all clear diesel.

• Clear diesel fuel is not dyed and has a low sulfur content.
• It may be used in all registered motor vehicles and off-highway equipment.
• Vermont Diesel Tax rate.
• Motor Fuel Transportation Infrastructure Assessment fee.

2. Vermont diesel fuel tax does not apply to dyed diesel.

Dyed diesel is colored red and has either a high or low sulfur content.

• High Sulfur dyed diesel may be used only in unregistered equipment, stationary engines, tractors, etc. EPA regulations prohibit its use in motor vehicles.
• Low Sulfur dyed diesel may be used in stationary engines, tractors, equipment and other vehicles that are not required to be registered. It may also be used in vehicles operated exclusively by state and local Governments.

3. Diesel in Storage Tanks:

If you have only one diesel storage tank and use the fuel in both taxable and nontaxable ways, you must buy taxed clear diesel. When you use tax-paid diesel fuel in nontaxable ways, you may apply for a tax refund by filing the Vermont Diesel Fuel Refund Application ( 39.3KB). Records must be maintained for four (4) years indicating the number of gallons withdrawn from the tank and put into each vehicle or piece of equipment.

4. Sales tax on dyed diesel:

Vermont requires a use tax be paid on dyed diesel unless the sale is for propulsion use.

If you have any questions please call Commercial Vehicle Operations at:

120 State Street
Montpelier, VT 05603
802-828-2070

Vermont Diesel Fuel Refunds

1. You may claim a refund of the Vermont diesel tax (and Motor Fuel Transportation Infrastructure Assessment fee) if:

• You have fuel receipts indicating the state tax and Motor Fuel Transportation Infrastructure Assessment fee were paid, and
• You use the fuel in a nontaxable manner, such as to operate:
  • A stationary engine
  • Unlicensed equipment & vehicles
  • A refrigeration unit with a separate fuel tank
  • A furnace or other device to heat a building or structure
  • Off-road use

2. You may NOT claim a refund for fuel used in:

• A licensed motor vehicle that is operated on a Vermont road or highway that is open to the public.

3. To claim a refund:

• Complete the  Vermont Diesel Fuel Refund Application ( 39.3KB)
• Describe the nontaxable use of the taxed fuel
• Include fuel invoices indicating the state tax was paid
• Mail the completed application to:

Commercial Vehicle Operations
120 State Street
Montpelier, VT 05603

When you claim your diesel tax refund, you may owe Vermont sales tax. This requires that you must be registered with the Vermont Department of Taxes. For additional information please contact Tax Payer Services at 802-828-2551.