Vermont Sales and Use Tax generally applies to tangible personal property, but there are exemptions for purchases made for agricultural production. An item is tax-exempt if it is being used only for agricultural production. For example, a farmer may buy fertilizer to grow vegetables for sale at a farm stand (tax-exempt), but the farmer may buy that same fertilizer for personal use to fertilize a home garden (taxable).
Taxable Protective Equipment
In those instances where protective clothing may be worn during the agricultural process, while clothing is tax-exempt, protective clothing is subject to Vermont Sales and Use Tax. See a listing of taxable protective clothing in our General Guidelines on Sales Tax: What is Taxable and Exempt? or at 32 V.S.A. § 9701(36).
Exemptions for Items Purchased for Agricultural Production
Agricultural Machinery and Equipment
Agricultural machinery and equipment are exempt from Vermont Sales and Use Tax under Vermont law at 32 V.S.A. § 9741(25) if they are used predominately in the production of agricultural or horticultural commodities for sale. “Predominately” means 75 % of the time the machinery or equipment is in use. Learn more about the exemption for agricultural machinery and equipment.
To determine whether an item is taxable or qualifies for the exemption, read our fact sheet FS-1053 Agricultural Machinery, Equipment, and Supplies: Taxable or Tax Exempt? The fact sheet uses a question and answer format to lead you through the requirements of the law.
The Exemption Certificate: What You Need to Know
When making a tax-exempt purchase, the buyer must present an exemption certificate to the seller at the time of purchase. There are several different types of exemption certificates, and the buyer and seller must make sure the correct certificate is used for the item purchased. The buyer and seller should have a good understanding of the exemption certificate and instructions before making the tax-exempt transaction in “good faith.” The seller must keep the certificate for three years after the exempted sale.
If the machinery or equipment being purchased is exempt from sales tax, the buyer must submit a completed Form S-3A, Vermont Sales Tax Exemption Certificate for Agricultural Fertilizers, Pesticides, Supplies, Machinery & Equipment, to the seller.
Agricultural Supplies Typically Used for Agriculture
Agricultural supplies may be exempt under Vermont law at 32 V.S.A. § 9741(3), but they must pass two tests:
Test 1: Does the item fall into one of these categories?
- Agricultural feeds
- Baler twine
- Silage bags
- Agricultural wrap
- Sheets of plastic for bunker covers
- Liming materials
- Breeding and other livestock
- Semen breeding fees
- Baby chicks
- Turkey poults
- Agricultural chemicals other than pesticides
- Veterinary supplies
If the answer is NO, then the item is subject to Vermont Sales and Use Tax. If the answer is YES, move on to the Test 2 question.
Test 2: Is the item typically used for agriculture?
- YES: the item is tax-exempt, and an exemption certificate is not required at the point of purchase
- NO: the item is subject to Vermont Sales and Use Tax
For more information, see Agricultural Machinery, Equipment, and Supplies: Taxable or Tax Exempt?
Electricity and Fuel Used for Agricultural Purposes
Electricity and fuel used directly and exclusively for farm purposes are not taxable under Vermont law at 32 V.S.A. § 9741(27). In most cases, no exemption certificate is required. If the use is not obvious or if only a portion of the fuel purchased is exempt, you should complete and submit Form S-3F, Vermont Sales Tax Exemption Certificate for Fuel or Electricity. For more information, read the instructions on Form S-3F.
Specific Exemption for Some Compost, Animal Manure, Manipulated Animal Manure, and Planting Mix
Pre-packaged compost, animal manure, manipulated animal manure, and planting mix used for a home garden or agricultural production is subject to Vermont Sales Tax. The exemptions under Vermont law at 32 V.S.A. § 9741(50) are the following:
- when the compost is sold in bulk (not packaged) or
- sold pre-packaged in volumes greater than one cubic yard
If the purchase meets one of these two exceptions, the purchase is exempt from Vermont Sales Tax. No exemption certificate is needed when they meet the exemption requirements listed above—they are exempt no matter who is making the purchase or the purpose of its use.
For more information please contact us.
LAWS, REGULATIONS AND GUIDANCE
32 V.S.A. § 9741
Vermont Sales and Use Regulations