Getting Started with Meals and Rooms Tax

If your business is selling meals or renting rooms, you must charge, collect, and remit Vermont Meals and Rooms Tax to the Vermont Department of Taxes. Be sure to post your Vermont license authorizing you to collect meals and rooms tax in a place where customers can see it. If you are selling alcohol for immediate consumption, please see information on the Alcoholic Beverage Tax.

Before You Open for Business

Vermont businesses, including nonprofits, must register for a Vermont Business Tax Account and a Meals & Rooms Tax license prior to collecting the tax. Registration is free.

Apply for your License

If your business will be collecting Meals and Rooms Tax, you are required to obtain a license from the Department. The license authorizes you to collect taxes on behalf of the State of Vermont.

The license must be displayed at your place of business where it can be easily seen by customers. There is no charge for a Meals and Rooms Tax license.

Operating More Than One Location in Vermont

You will have just one Vermont Business Tax Account, but each location must obtain its own license and will file its own meals and rooms tax schedule. To obtain additional licenses, you must register each location separately.

What is taxable in Vermont?

Any meal offered for sale by a “restaurant” or room offered for sale by a “hotel.” It is important to know what is included in the definition of a “restaurant” or a “hotel.” Please refer to the Vermont Meals and Rooms Tax regulations and publications for more information.

Please note: If you offer a room in your home (or any kind of privately owned lodging) for rent and your rental falls within the guidelines for a “hotel,” you must collect and remit rooms tax.

What Is Not a Taxable Meal?

These are not considered taxable meals, even when sold by a restaurant:

  • Self-serve, bulk, non-prepackaged grocery items such as fruit, vegetables, candy, flour, nuts, and coffee beans
  • Grocery-type items furnished for take-out such as whole pies or cakes, loaves of bread, single serving bakery items sold in quantities of three or more

What Are Always Taxable Meals?

Some items are taxable even when sold by a business not defined as a restaurant, e.g., sandwiches (except frozen), heated food or beverages, items from a salad bar, and party platters and prepared food.

Tax Rate

How to Calculate Meals and Rooms Tax

To determine tax due, multiply the sale amount by 9% (or 10% if the sale is subject to local option tax), and round up to the nearest whole cent according to the following rules:

  1. Tax computation must be carried to the third decimal place, and
  2. 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.

How to File

Go to our Meals & Rooms Tax section for a list of filing methods, forms, and tools to help you get started.

Exemptions

Meals for Resale Exemption: If you are buying meals from a seller with the intent to resell them to your customers, then you may purchase the meals without paying meals tax to the seller. To get the meals tax exemption, you must submit Form M-3, Vermont Meals Tax Exemption Certificate for Purchase of Meals for Resale, to the seller. When you resell the meal to our customer you must collect and remit meals tax to the Department of Taxes.

Learn more about the exemption for meals for resale. For more exemptions for meals and rooms tax, see information on vending machines and tax-exempt nonprofits.

Local Option Tax

If you are doing business in or delivering products to a municipality with a 1% local option meals and/or rooms tax, you must also collect and remit that tax to the Vermont Department of Taxes. Learn more about Local Option Tax, including a list of local option towns.

Other Local Taxes

The City of Burlington, City of Rutland, and City of St. Albans administer and collect their own local meals, entertainment, lodging, or alcoholic beverage taxes.  If you have a business in Burlington, Rutland City, or St. Albans City, please contact the appropriate city for information on how to pay and remit the tax.

Contact the City of Burlington:
(802) 865-7000

Contact the City of Rutland:
(802) 773-1800

Contact the City of St. Albans:
(802) 524-1500