Vermont has a 6% statewide sales tax that applies to most transactions involving tangible personal property or taxable services purchased in the state. Some cities and towns also impose a local option sales tax on all or a portion of the same purchases.
The Vermont sales tax was first enacted in 1969 at a rate of 3%. The rate increased to 4% in 1978, 5% in 1982, and 6% in 1986. Revenues from the sales tax go into the state’s Education Fund to support preK-12 education spending.
In this comprehensive guide, we’ll cover everything you need to know about Vermont sales tax, including:
- Sales tax rates in Vermont
- What’s taxable and exempt from sales tax
- How to calculate Vermont sales tax
- Sales tax exemptions
- How to collect and file Vermont sales tax
- Sales tax administration and audits
- Answers to common questions about Vermont sales tax
Keep reading to learn more about sales tax requirements and policies in the state of Vermont.
Vermount Sales Tax Calculator
Manually calculating sales tax for every transaction can be tedious. Luckily, there are a number of free sales tax calculators available online:
Vermont Sales Tax Calculator
Vermont Sales Tax Calculator
This calculator make it simple to find the sales tax rate and calculate the amount owed for any address in Vermont. Retailers can use it at checkout or on invoices to streamline collecting Vermont sales tax.
Vermont Sales Tax Rates
The statewide sales tax rate in Vermont is 6%. This 6% tax applies to the retail sale, lease, or rental of tangible personal property and taxable services in the state.
In addition to the 6% state sales tax, some Vermont cities and towns impose a local option tax that adds between 1-2% in additional tax on the same transactions subject to the 6% state tax.
Here are the local option sales tax rates in Vermont as of November 2023:
Local Option Sales Tax Rates
| City/Town | Local Tax Rate | Total Rate* |
|---|---|---|
| Burlington | 1% | 7% |
| Brattleboro | 1% | 7% |
| Barre City | 1% | 7% |
| Williston | 1% | 7% |
| Rutland City | 1% | 7% |
| Montpelier | 1% | 7% |
| St. Albans City | 1% | 7% |
| Winooski | 1% | 7% |
| South Burlington | 1% | 7% |
| Colchester | 1% | 7% |
| Bennington | 1% | 7% |
| Hartford | 1% | 7% |
| Springfield | 0.5% | 6.5% |
| Dover | 1% | 7% |
| Middlebury | 1% | 7% |
| Vergennes | 1% | 7% |
| Milton | 1% | 7% |
*Total Rate includes state sales tax rate plus local option tax rate
A few Vermont towns have a local option tax that only applies to meals and alcoholic beverages. This includes Killington (1%), Manchester (1%), Swanton (1%), and Woodstock (1%). Purchases in these towns other than meals and alcohol are taxed at the 6% state sales tax rate.
The sales tax rates in Vermont can change periodically with new local option taxes adopted. Use the Vermont Department of Taxes sales tax lookup tool to check current rates.
Next, we’ll go over what types of goods and services are taxable under Vermont sales tax.
What’s Taxable Under Vermont Sales Tax
Vermont sales tax applies to the retail sale, lease, or rental of most tangible personal property and some services in the state. Some examples of taxable transactions include:
- Sales of clothing, furniture, electronics, household goods
- Restaurant meals and prepared foods
- Hotel rooms and other lodging rentals
- Alcoholic beverages
- Marijuana and cannabis products
- Admission fees for entertainment, sporting events, etc.
- Motor vehicles, RVs, boats, aircraft
- Digital products like music, movies, ebooks, software
- Garage and yard sales if registered as a vendor
Some services that are subject to Vermont sales tax include:
- Auto repairs and maintenance
- Landscaping services
- Pet boarding and grooming
- laundering services
- Telecommunications services like phone plans
- Home repair and installation services
- Recreation and entertainment services
What’s Exempt from Vermont Sales Tax?
Some exceptions to the sales tax include:
- Most groceries and food items
- Prescription drugs and medical equipment
- Gasoline
- Newspapers and magazines
- Lottery tickets
- Care services like child care, home health, residential care
- Most educational services
- Business services like legal, accounting, payroll services
- Real estate transactions and rentals
- Aircraft repair parts and equipment
We’ll cover sales tax exemptions in Vermont in more detail later in this guide. The state also has specific exemptions for nonprofits, manufacturers, and research and development facilities.
Next, we’ll go over how to calculate Vermont sales tax on a taxable purchase.
How to Calculate Vermont Sales Tax
Calculating Vermont sales tax is easy once you know the tax rate that applies. Here are the basic steps:
- Find the sales tax rate: Look up the state (6%) and local option rate based on the town/city using the Vermont sales tax lookup tool.
- Calculate the state sales tax: Multiply the 6% state sales tax rate by the pre-tax purchase price.
- Calculate the local option tax: Multiply the local option tax rate by the pre-tax purchase price.
- Add the state and local taxes together to get the total sales tax due.
- Add sales tax to the original price to get the total sales price.
Let’s walk through an example:
- You purchase a $500 TV at an electronics store in South Burlington
- South Burlington has a 1% local option tax, so the total tax rate is 6% (state) + 1% (local) = 7%
- To calculate the sales tax:
- 6% state tax: 6% x $500 = $30
- 1% local option tax: 1% x $500 = $5
- Total tax = $30 + $5 = $35
- The total sales price including tax is $500 + $35 = $535
When calculating Vermont sales tax on an invoice or receipt, retailers should list the state sales tax and local option tax separately, rather than just the total rate.
Some Vermont towns do not have a local option tax, so purchases in those areas are only subject to the 6% state sales tax. Make sure to verify the rates before calculating sales tax.
Next, we’ll cover sales tax exemptions that apply in Vermont.
Vermont Sales Tax Exemptions
Vermont provides sales tax exemptions to individuals, businesses, and organizations that meet certain criteria. The main exemptions are:
Grocery Food Items
Most grocery food items are exempt from Vermont sales tax under 32 V.S.A. § 9741. This includes ingredients used in cooking like meats, fruits, vegetables, breads, etc.
Ready-to-eat foods are still taxable unless sold as a full meal from a grocery store.
Clothing & Footwear
Sales of clothing priced under $176 per item are exempt from Vermont sales tax. This includes things like shirts, pants, dresses, underwear, shoes, etc. Accessories like jewelry, watches, handbags are still taxable.
Medical Products
Prescription drugs and other medical products used for medical treatment are exempt under 32 V.S.A. § 9741(2). Examples include prescription eyeglasses, prescription drugs, prosthetics, medical oxygen, wheelchairs.
Energy Efficient Products
32 V.S.A. § 9741(52) exempts sales of energy efficient products like solar panels, wood pellets, advanced wood boilers.
Nonprofits
Qualified 501(c)(3) nonprofit organizations can apply for an exemption permit to purchase goods and services tax-free. Certain restrictions apply.
Manufacturing & R&D
Machinery/equipment used directly in manufacturing or R&D is exempt as well as building materials for facilities. Electricity used in manufacturing is also exempt.
Agriculture & Forestry
Farm equipment along with sawmill/logging equipment up to $200k value are exempt. Feed, seed, fertilizer, pesticides for farming use are also exempt.
Aircraft
Aircraft parts, repairs, and maintenance services are exempt along with sales of aircraft for use outside the state.
These are some of the major Vermont sales tax exemptions available. The full list is contained in 32 V.S.A § 9741. Sellers should maintain exemption certificates on file.
Next, we’ll go over how to properly collect and file Vermont sales tax.
Collecting & Filing Vermont Sales Tax
Who Needs to Collect Sales Tax?
Any seller that has a physical presence or economic nexus with Vermont must register to collect state sales tax plus any applicable local option taxes. This includes:
- Vermont-based businesses making taxable sales
- Out-of-state sellers with physical presence in Vermont (e.g. warehouse, employees, trade shows)
- Online and remote sellers who exceed Vermont economic nexus thresholds
- Marketplace facilitators who facilitate sales for Vermont sellers
- Retailers making sales on Vermont Marketplace sites like Amazon, eBay, Etsy
Out-of-state sellers without physical or economic nexus in Vermont (small volume remote sellers) are not required to collect the state’s sales tax. However, Vermont residents are still responsible for remitting use tax on qualifying untaxed purchases.
Economic Nexus Thresholds
Under Vermont’s economic nexus laws, remote sellers who exceed either of the following thresholds must register to collect Vermont sales tax:
- Gross revenue from Vermont sales exceeding $100,000 per year
- 200 or more separate sales transactions in Vermont per year
These economic nexus thresholds took effect on July 1, 2019. They apply based on sales in the current or previous calendar year.
Registering for a Sales Tax Permit
Retailers that meet the collection thresholds need to register for a Vermont Sales Tax Permit. You can register online through the Vermont Department of Taxes.
The permit allows you to collect Vermont sales tax and provides reporting forms to file returns. The registration fee ranges from $15 – $30 depending on sales volume.
Once registered, sellers will receive a Vermont Sales Tax Account Number. This number should be displayed on all invoices and receipts as proof that you are registered to collect Vermont sales tax.
Charging Customers the Correct Rate
The sales tax rate charged to customers should match the buyer’s location. For over-the-counter sales, this is based on the store location. For remote sales, it depends on the shipping address or customer location.
Sellers in jurisdictions with local option taxes need to charge the combined state and local rates. Be sure to use an address-based sales tax calculator at checkout to get accurate rates.
Do not collect sales tax on exempt purchases. Require buyers to provide valid exemption certificates.
Filing Sales Tax Returns
Vermont requires monthly or quarterly sales tax filing depending on sales volume:
- Retailers with less than $500 in average monthly collected sales tax can file quarterly returns. Due on April 25, July 25, Oct 25, Jan 25 covering the preceding 3 months.
- Retailers that collect $500+ per month must file monthly returns. Due on the 25th of the following month.
Returns are filed using Form S-21/S-21M along with any local option tax forms. Returns and payments can be submitted electronically through myVTax or by paper filing. Include the Vermont Sales Tax Account Number on all returns.
Keep detailed records of gross sales, exempt sales, tax collected and inventory for 4 years. This includes taxpayer invoices, bills, credit card slips and resale certificates. Records must be provided if audited. Failing to file returns or pay taxes owed will result in penalties.
Collecting Local Option Taxes
In jurisdictions with a local option tax, the state tax and local tax must be tracked separately.
- You need to complete Form S-21 to report the 6% state tax along with a local option tax form:
- Form LO-01 (1% local tax)
- Form LO-02 (0.5% local tax)
- Form LO-04 (2% local tax)
- Local taxes collected are remitted directly to the applicable town/city, not the state.
Check the Vermont Dept. of Taxes website for full instructions on filing sales tax returns, reporting local option taxes, filing zero returns, making corrections, and more.
Sales Tax Audits in Vermont
Like other states, Vermont conducts periodic sales and use tax audits of businesses to ensure proper tax compliance. Some triggers that may lead to an audit include:
- Failure to file returns or pay taxes owed
- Substantial changes in gross sales from previous filings
- Large amounts claimed for exemptions or deductions
- Discrepancies or inconsistencies in previous returns
- Issues uncovered during audits of other companies
- Information obtained indicating non-compliance
The Vermont Department of Taxes will send notice of intent to audit including requested records. Audits typically examine:
- Proper collection, reporting, and remittance of sales tax
- Proper documentation for any exempt sales or other deductions claimed
- Billings for taxable goods/services correspond to tax returns
- Inventory records match taxable purchases/sales
- Proper sales sourcing and tax rates charged
Companies should cooperate fully by providing all requested records in an organized manner by the deadline given. Be upfront about any known issues – the state is willing to waive penalties for taxpayers that self-disclose errors prior to audit.
If the audit uncovers substantial underpayment of taxes owed, the state may assess the business additional tax plus interest and penalties. Make sure to retain an experienced sales tax accountant or attorney if facing a Vermont sales tax audit. They can help minimize potential liabilities.
Maintaining detailed records and following all sales tax laws and procedures can help businesses avoid issues during audit. Missed tax due to errors or oversight can be corrected by filing an amended return.
FAQs on Vermont Sales Tax
1. What purchases are exempt from sales tax in Vermont?
The main sales tax exemptions in Vermont include groceries, clothing under $176, prescription medications, energy efficient products, purchases by nonprofits, farm/logging equipment, and manufacturing machines.
2. Does Vermont have tax-free weekends?
No, Vermont does not currently have any tax holiday periods where sales tax is suspended.
3. Are online or internet sales subject to Vermont sales tax?
Yes, internet and catalog retailers that have a physical presence or exceed economic nexus thresholds in Vermont must collect state sales tax on orders from customers in the state.
4. Do I need a sales tax permit if I only make sales at craft fairs or festivals in Vermont?
If you make 3 or more events per year, or have gross annual sales exceeding $1,000 you need to register for a Vermont sales tax permit and collect tax.
5. If my business has multiple locations in Vermont, do I need a separate sales tax permit for each?
No, you only need one Vermont sales tax permit. Report total sales for all locations when filing returns under your one account number.
6. What records do I need to keep for sales tax purposes?
You must keep detailed records of gross sales, exemptions, taxes collected, and inventory for at least 4 years. This includes taxpayer receipts, invoices, bills of lading and exemption certificates.
7. How do I provide resale or tax exemption certificates to suppliers?
Once registered, sellers can provide suppliers with a copy of your Vermont sales tax permit as proof of exemption along with Form S-3. Nonprofits must submit their VT tax exempt certification.
