Vermont Mileage Deduction 2026: 8.75% Makes Miles Worth More

Vermont's top individual income tax rate is 8.75%, among the highest in the country. That makes a business mile worth measurably more here than almost anywhere else. A driver logging 18,000 business miles deducts $13,680 and keeps roughly $6,300, of which about $1,197 is Vermont tax alone.

Source: 32 V.S.A. § 5822, setting Vermont's individual income tax brackets at 3.35%, 6.6%, 7.6%, and 8.75%. Verified August 2026.

Four brackets, and the deduction crosses them

Vermont's schedule runs 3.35%, 6.6%, 7.6%, and 8.75%. The gap between the bottom and top rate is over five percentage points, wider than the entire top rate in states like Utah or Oklahoma. For a driver near a bracket boundary, a full year of logged mileage frequently pulls taxable income down across one or two of those thresholds.

That is why the marginal value of the last miles you log is higher than the average. If the deduction moves you from the 8.75% band into the 7.6% band, the first slice of it offsets at 8.75% and the rest at 7.6%. A partial mileage log forfeits the highest-value slice first.

High rate, and the reimbursement gap still bites

Vermont has no statute compelling private employers to reimburse business mileage. Combined with the highest tax rates in this group, that creates the worst version of the employee problem: a Vermont W-2 driver who is not reimbursed loses the money and has no deduction to recover any of it. The exposure is larger here precisely because the rates are.

Filing in Vermont

Take the deduction on federal Schedule C, Line 9 at 76¢ (the rate from 1 July 2026; 72.5¢ before that). Vermont Form IN-111 starts from federal adjusted gross income, so the reduction carries through automatically. Vermont has no local income taxes. Given the rate, quarterly estimated payments are worth getting right rather than truing up in April.

FAQ

Is Vermont's top rate 11.75%?

No. H.933 proposed additional brackets at 11.75% and 13.75% but was not enacted. The statutory top rate under 32 V.S.A. § 5822 remains 8.75%.

Why is my mileage deduction worth more in Vermont?

Because the deduction offsets income at your marginal rate, and Vermont's marginal rates are high. The same 13,680-dollar deduction that saves about $616 in Utah saves about $1,197 in Vermont on the state side.

Does Vermont follow the federal 76¢ (the rate from 1 July 2026; 72.5¢ before that) standard rate?

Vermont does not publish its own deduction rate. It begins from federal adjusted gross income, so whatever the federal standard mileage rate produces is what carries into the Vermont calculation.

Track every business mile. Start free with TruMile →

Related guides