Even though an item for sale is subject to Vermont tax, it becomes exempt from tax when payment is made with a 3SquaresVT EBT card. 3SquaresVT is Vermont’s name for the federal Supplemental Nutrition Assistance Program or SNAP. Eligible items purchased using a 3SquaresVT EBT card are exempt from tax. Here are general guidelines for sellers that accept 3SquaresVT EBT cards.
Basic Guidelines
Following are the basic guidelines of 3SquaresVT:
- Items purchased with 3SquaresVT are exempt from state and local taxes. 7 CFR § 272.1; 32 V.S.A. § 9741(13).
- 3SquaresVT benefits may be used to purchase food items such as breads and cereals, fruits and vegetables, meats, fish, poultry and dairy products, or any food or beverage with a “Nutrition Facts” label.
- Items with a “Supplement Facts” label are not eligible for purchase with 3SquaresVT benefits.
- Items purchased with EBT cash are subject to tax.
Even though the following items are subject to tax in Vermont, they are exempt from tax when purchased with a 3SquaresVT EBT card:
Vermont Sales and Use Tax
The sales of soft drinks are exempt from Vermont Sales and Use Tax when purchased with an EBT card. Otherwise, soft drinks are subject to tax.
Vermont Meals and Rooms Tax
Even though the following items are subject to Vermont Meals and Rooms Tax in Vermont, they are exempt from tax when purchased with a 3SquaresVT EBT card:
- Fewer than three single-serve bakery items (normally one to two items are considered a meal and subject to meals tax)
- Cold prepared sandwiches to be eaten off-premises
- Cold food from the salad bar to be eaten off-premises
How to Apply Payments Using 3SquaresVT EBT Card Benefits
When a customer uses a 3SquaresVT EBT card to pay for eligible purchases, payment must be applied first to eligible items normally subject to tax in Vermont. When the EBT card is applied, these items become exempt from tax under the 3SquaresVT eligibility rules. If any taxable items remain to be paid for after 3SquaresVT benefits are used, those items will be taxed.
Examples
- A customer buys $40 worth of goods at the grocery store and pays for them with $10 worth of 3SquaresVT benefits using an EBT card and $30 cash. The eligible taxable items cost $5. Since $10 worth of 3SquaresVT benefits is used, no tax applies to the sale of the eligible items. Tax still applies to any items that cannot be purchased with 3SquaresVT benefits, such as any product with a supplement facts label, paper products, and cleaning supplies.
- Same as above, except the eligible taxable items cost $12. In this situation, do not charge tax on the $10 that is covered by 3Squares VT benefits using an EBT card. The $2 not covered by 3SquaresVT benefits is taxable along with any other taxable items.
Any time a customer chooses to use cash from a 3SquaresVT benefit to purchase an item subject to tax, the seller must charge tax. Cash cannot be tracked to the 3SquaresVT benefit.