Alcoholic Beverage Tax

Overview

Alcoholic beverages are subject to Vermont taxes. Before you begin selling alcoholic beverages, you must have your Vermont business tax account and licensing. Be sure to post your license authorizing you to collect Vermont taxes in a place where customers can see it, such as near a cash register. The Department of Taxes does not issue licenses to sell alcohol. For licensing information, visit the Vermont Department of Liquor Control.

Taxability of Alcoholic Beverages Provided for Takeout

As part of Vermont’s response to the Covid-19 pandemic, the Governor signed a directive allowing businesses to sell and deliver alcoholic beverages, as long as the beverages are purchased with a meal. The directive also allowed delivery of alcohol products by licensed retail stores.

Restaurants

Alcoholic beverages sold by a restaurant for takeout are subject to the 10% tax on alcohol required by the Vermont Meals Tax.  The term “restaurant” includes cafes, cafeterias, dining rooms, diners, lunch counters, salad bars, private or social clubs, bars or taverns, theater concessions, street vendors, street carts, food trucks, and catering businesses. For more details on what qualifies as a restaurant, see restaurants.

Alcoholic beverages are subject to the 10% tax when they are served for immediate consumption. Because the Governor’s directive requires takeout alcoholic beverages to be sold with a meal, the Department of Taxes presumes that the takeout meal and the accompanying alcohol are both for immediate consumption.

Note that a charge for delivery is considered part of the price for a meal or alcoholic beverage. This means meals tax applies to all delivery charges. All charges are also subject to the highest applicable tax rate unless separately stated on the receipt or invoice and separately reported to the Department. Accordingly, a restaurant should apply the 10% alcohol rate to delivery charges if it does not itemize the receipt to show separate charges for delivery of meals and delivery of alcoholic beverages.

Grocery and Convenience Stores

Licensed retail stores that do not qualify as restaurants collect 6% sales tax when selling alcoholic beverages for delivery. The sales tax must be applied to the full charge, including any charge for delivery.

Please contact the Department at (802) 828-2551 or send an email if you have any questions.

Sales and Use Tax

Sales of alcoholic beverages by retailers, such as grocery stores or convenience stores, that

  1. are suitable for human consumption and
  2. contain one-half of 1% or more of alcohol by volume are subject to the 6% Vermont Sales and Use Tax. See definition at 32 V.S.A. § 9701(23).

Alcoholic Beverage Tax

Sales of alcoholic beverages that

  1. are any malt beverages, vinous beverages, or spirituous liquors and
  2. are served for immediate consumption are subject to the 10% Vermont Alcoholic Beverage Tax. For more information, see 7 V.S.A. Chapters 1 and 9.

Tax Included in Pricing

Businesses are required to give notice to their customers when the Vermont Meals and Rooms Tax or Alcoholic Beverage Tax is included in the pricing of food, room rentals, or served alcoholic beverages.

You must do one of the following:

  1. Provide a sign or signs with the type of tax charged in an area where customers may view them, such as near the cash register.
  2. Make a statement on the menu, price list, bill, invoice, statement, or receipt given to the customer.

In addition, you must provide an itemized bill to any purchaser upon request.

Below is an example of how a notice might read:

All prices include the Vermont Alcoholic Beverage Tax

All businesses that include the 9% meals tax and the 10% alcohol tax in their prices must give notice. This includes, but is not limited to, the following:

  • Restaurants and bars
  • Hotels
  • Mobile facilities such as street vendors and lunch wagons
  • Vending machines
  • Other businesses and facilities described in 32 V.S.A. §  9202(15)    

Local Option Tax

If you are doing business in or delivering products to a municipality with a 1% local option alcoholic beverages tax or local option sales tax, you must also collect and remit that tax to the Vermont Department of Taxes. Please note: Meals and rooms tax is not subject to use tax.

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 collect 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

How to File

Paper Returns
Form MRT-441, Meals and Rooms Tax Return

Filing Frequency

Filing frequency for a new business is based on how much tax you estimate you will pay when you apply for your Vermont business tax account and licensing. After your first year of tax payments, the Department may adjust your filing frequency.

Forms and Publications

No. Instructions Title
MRT-441 Instructions Meals and Rooms Tax Return
Publications
No.   Title
FS-1114   Brewers, Winemakers, and Distillers: Vermont Taxes and the Manufacture and Sale of Alcoholic Beverages
FS-1010   How to Inform Customers When Meals, Rooms, or Alcoholic Beverage Tax Is Included in the Pricing