Nonprofit organizations must file returns and pay—or collect and remit taxes—for some tax types in Vermont. Nonprofits should not assume that just because they have obtained “tax-exempt” status at the federal level through the IRS, they do not need to pay or remit any taxes in Vermont. If you operate or manage a nonprofit, you should learn which Vermont taxes apply to you.
Eligible Tax-Exempt Nonprofits
Vermont follows the federal IRS designations for tax-exempt nonprofit organizations found in federal law at 26 U.S.C. Subchapter F. Some of these exempt nonprofits must pay Vermont taxes or collect and remit Vermont taxes under certain circumstances, which are described below.
Many federally exempt nonprofits are 501(c)(3), organized for exempt purposes that include charitable, religious, educational, scientific, literary, etc. There are other types of exempt nonprofits, such as 501(c)(4), social welfare organizations; 501(c)(5), labor and agricultural organizations; 501(c)(8) and 501(c)(10), fraternal societies; 501(c)(19) or Vermont Business Taxes and Your 501(c)(19) Organization, Veterans organizations; and more. Please review your IRS determination letter to be certain of the designation assigned to your nonprofit.
When the IRS revokes the federally designated tax-exempt status of an organization, the organization can no longer claim tax-exempt status under Vermont law. The day following the date of revocation, the organization is subject to Vermont taxes as any for-profit, commercial business operating in Vermont.
Exemptions by Tax Type
Below you will find helpful tools and a list of tax types to help you understand your tax responsibilities:
Tax Forms and Instructions
| Form Number | Instructions | Title | Revised |
|---|---|---|---|
| B-2 | Included | Notice of Change | 2022 |
| BR-400 | Included | Application for Business Tax Account | 2020 |
| S-3 | Included | Vermont Sales Tax Exemption Certificate for Purchases For Resale, by Exempt Organizations, and by Direct Pay Permit | 2021 |
Fact Sheets and Guidance
| Title | Number | Revised |
|---|---|---|
| Vermont Business Taxes and Your 501(c)(19) Organization | FS-1145 | 2023 |
Statutes, Rules, and Regulations
| Title | Section |
|---|---|
| Defined | 26 U.S.A. §527(e) |
| Entertainment Charges by Section 501(c)(3) Organizations and Political Organizations | Technical Bulletin 61 |
| Nonprofit Organizations Exemption | Technical Bulletin 02 |
| Purchaser- Based Treatment of the Meals and Use Tax and Sales and Use Tax | Technical Bulletin 13 |
| Sale by Tax Exempt Organizations | Technical Bulletin 19 |