Vermont Mileage Deduction 2026: Up to 8.75% State Tax

Vermont's top income tax rate is 8.75%, the seventh highest in the country. At 15,000 business miles and a 7% effective rate, you save roughly $761 in state taxes on top of about $4,056 in federal income and self-employment tax savings. That is about $4,817 back for keeping a mileage log. The high state rate means every deductible mile is worth significantly more here than in most states.

Vermont also imposes a 0.11% Child Care Contribution tax on all net self-employment income with no income cap. This is a separate line item on your state return, an extra payroll-style tax that only self-employed people pay. It is small per dollar, but it adds up on high Schedule C income and is easy to miss when estimating quarterly payments.

How to File

Deduct your business miles on federal Schedule C, Line 9 at 72.5¢/mile. Vermont starts with your federal adjusted gross income, so the mileage deduction flows through to your state return automatically. Keep a mileage log with the date, destination, purpose, and miles for each trip. If you expect to owe more than $500 in state taxes, make quarterly estimated payments.

The state does not require employers to reimburse mileage. If you drive for work, tracking is the only way to get the money back.

FAQ

Does Vermont require mileage reimbursement?

No. Vermont has no state law requiring private employers to reimburse mileage.

Does my mileage deduction reduce Vermont state taxes?

Yes. Vermont uses your federal adjusted gross income as the starting point. Your Schedule C mileage deduction reduces that number, which directly reduces your state tax.

Can W-2 employees deduct mileage in Vermont?

No. The mileage deduction for W-2 employees was permanently eliminated under the One Big Beautiful Bill. If your employer does not reimburse, you have no tax remedy.

Track every business mile. Start free with TruMile →