We provide information, so you can determine when sales and use tax applies to your business.
Before You Open for Business
Vermont businesses, including nonprofits, must register for a business tax account and license prior to collecting the tax. Registration is free.
If your business is selling tangible personal property (TPP) that is taxable in Vermont, you must charge, collect, and remit Vermont Sales and Use Tax to the Vermont Department of Taxes before you begin to make sales.
Be sure to post your Vermont license authorizing you to collect sales tax in a place where customers can see it.
What is Taxable in Vermont?
TPP sold to a customer in Vermont or delivered to a Vermont address is subject to Vermont Sales and Use Tax.
The Vermont Sales and Use Tax is 6%.
How to Calculate Sales Tax
To determine tax due, multiply the sales amount by 6% (or 7% if the sale is subject to local option tax), and round up to the nearest whole cent according to the following rules:
- Tax computation must be carried to the third decimal place, and
- The tax must be rounded to a whole cent using a method that rounds up to the next cent whenever the third decimal place is greater than four.
- Sellers may elect to compute the tax due on a transaction on an item or an invoice basis. This rounding rule may be applied to the aggregated state and local taxes.
Filing Your Return
Go to our Sales & Use Tax section for a list of filing methods, forms, and tools to help you get started.
Will You Be Making Purchases Subject to Use Tax?
Vermont businesses should know what use tax is and when they need to pay it. Vermont’s 6% use tax is due if tax is not collected on a taxable purchase. This occurs when the seller is not registered with the Vermont Department of Taxes to collect tax and therefore does not charge Vermont tax. Examples of sellers who do not charge sales tax are many online vendors and vendors located in states with no sales tax—New Hampshire, for example—or states with a lower sales tax.
When is Use Tax Paid?
- When you make a purchase from a vendor not registered to collect tax with the state of Vermont
- When you use property you normally manufacture for sale
- When you use property in the operation of your business or for personal use that you originally purchased for resale with an exemption certificate
- Self-employed individuals purchasing items for use in their business must follow the rules for businesses.
- Individuals may also be responsible for personal use tax on Vermont taxable purchases where sales tax was not paid and must be claimed on the Vermont personal income tax return.
Exemptions from Sales and Use Tax
If you own a business that purchases items from a distributor or wholesaler and resells them to a customer at retail, you may be exempt from paying sales tax on items you’ve purchased for resale. You must then charge sales tax on items subject to tax that you resell at retail to customers.
To take the exemption, you must provide a Form S-3, Vermont Sales Tax Exemption Certificate for Purchases for Resale and by Exempt Organizations. You also must have a Vermont Sales and Use Tax account with the Department.
Local Option Tax
If you are doing business in or delivering products to a municipality with a 1% local option tax, you must also collect and remit that tax to the Vermont Department of Taxes. Towns may have one or more of the following local option taxes: sales tax and/or meals, alcoholic beverages, and rooms tax.
Please note: Use tax is not subject to local option tax.
Other Local Taxes
The City of Burlington and the City of Rutland administer and collect their own local entertainment, meals, and lodging taxes. If you have a business or do business in Burlington City or Rutland City, please contact the city for information on how to collect and remit the tax. The Vermont Department of Taxes does not collect these taxes.