Fuel

• Heating oil, gas, and other fuels used for commercial purposes in mixed-use buildings (both residential and commercial) are subject to sales tax, but the portion of fuel used for residential purposes is exempt. 32 V.S.A. § 9741(26)
  • Fuel delivered to a residence is allowed to be billed at a residential rate under applicable regulations or tariffs by the Public Service Board and are presumed to be exempt.
• Fuel purchased over the counter or picked up for residential use generally requires an exemption certificate to be exempted.  In limited circumstances, however, there is a presumption that the sale of a fuel for residential use is exempt, and a vendor is not required to obtain an exemption certificate.  This presumption applies to the following circumstances:
  • Wood pellets sold to an individual on the vendor's premises or delivered to an individual's residence, unless the vendor knew or ought reasonably to have known that the wood pellets were not purchased for residential use.
  • Sales of small quantities of fuel commonly used for residential and domestic use, but often purchased at a vendor’s location and not delivered, including charcoal briquettes, fire logs, and fire starters. This presumption does not apply – and a vendor is required to obtain an exemption certificate – if any of the following is true: (1) the sale exceeds $250.00; or (2) the vendor knows, or has reason to know, that the purchaser is not an individual (i.e., that the purchaser is a corporation, LLC, or other business) or that the fuel will not be used for residential and domestic use. The presumption will not apply if the purchaser has an account with the vendor that indicates that the purchaser is not an individual.
• Propane sold at retail in free-standing containers, or sold as part of a transaction where a free-standing container is exchanged without a separate charge 32 V.S.A. § 9741(26)
• No sales tax on propane refills using the purchaser’s own container
• Natural gas used to propel a motor vehicle 32 V.S.A. § 9741(7)(B)
• Dyed diesel used off road in stationary equipment (e.g., generators) for commercial
• purposes 32 V.S.A. § 9741(7)(A)(iii);
  • If equipment is capable of both propulsion and non-propulsion use, only the non-propulsion use of dyed diesel is taxable. Examples of mixed use equipment include excavators, bull dozers, and skid steers. Examples of non-propulsion uses are idles time, lifting, digging, and scooping.

• Heating oil, gas, and other fuels used in a residence for all domestic use, including heating 32 V.S.A. § 9741(26)
  • In mixed-use buildings (both residential and commercial), the portion of fuel used for residential purposes is exempt, but the portion for commercial purposes is subject to sales tax.
• Dyed diesel used to:
  • power forestry machinery; for a full list of exempt machinery and equipment that dyed diesel is bought to power, see 32 V.S.A. § 9741(51)
  • propel a vehicle on or off road, including specifically for agricultural or manufacturing purposes, 32 V.S.A. § 9741(7)(A)(iii), (27), (34)
  • If equipment is capable of both propulsion and non-propulsion use, only the propulsion use of dyed diesel is exempt.
• Sales of electricity, oil, gas, and other fuels used:
  • directly and exclusively for farming purposes 32 V.S.A. § 9741(27)
  • directly or indirectly in manufacturing tangible personal property for sale 32 V.S.A. § 9741(34)

Organizations that are exempt from sales and use tax under 32 V.S.A. § 9743:

• Federal and State of Vermont (including municipal) government entities
• Nonprofit organizations that qualify for exempt status under 26 U.S.C. § 501(c)(3), agricultural organizations, qualified for exempt status under 26 U.S.C. § 501(c)(5), when presenting agricultural fairs, field days or festivals
• Schools as defined in 16 V.S.A. § 11(7) and (8); and municipalities, which include any city, town, unorganized town, village, grant, or gore