Food or beverages sold in vending machines are subject to the Vermont Meals and Rooms Tax. Tax and exemptions from tax apply to vending machines based on such factors as location, the customer, and the operator of the vending machine.
General Rule: Taxable Food or Beverages
Food or beverages sold by restaurants and vending machines are considered meals subject to the Vermont Meals and Rooms Tax because they are offered for immediate consumption. All food or beverages sold through a vending machine are therefore taxable.
Items subject to tax include foods commonly sold in vending machines, such as candy, potato chips, and cookies, even though they would be exempt from sales tax when purchased at a grocery store. Vendors are required to charge tax for all vending machine sales unless a transaction qualifies for one of the tax exemptions explained below. Note: All beverages, including soft drinks, are subject to Vermont Rooms and Meals Tax when sold in vending machines.
Learn more about Vermont Rooms and Meals Tax.
Local Option Tax May Apply
Some Vermont municipalities impose a local option tax of 1% in addition to state meals tax. Businesses are responsible for collecting and remitting local option tax to the Vermont Department of Taxes.
Signage for Vending Machines
Because tax is included in the purchase price, vending machine operators are required to display a sign on their machines to notify customers. The following is an example:
All prices include the Vermont Meals Tax
Vermont Business Tax Account and License
Businesses and nonprofits must register for a Vermont Business Tax Account and license before collecting Vermont tax. Registration is free.
Vending machine operators do not need a license for each vending machine.
Exceptions to the General Rule: Meals and Rooms Tax Exemptions
Vermont imposes or exempts tax on items sold in vending machines depending on 1) where the vending machine is located, 2) the customer served, and 3) the organization that operates it. The following table explains these factors to help you determine whether or not the vending machine(s) you operate is subject to tax:
|Vending Machine Location|
See 32 V.S.A. § 9202(9) for the definition of a school or contact the Department for guidance.
|Sales by vending machines in schools are not taxable.|
|Government Property||Sales by vending machines located on local, state, or federal government properties that serve or furnish food or beverage to government employees are not taxable.||The exemption is limited to government employees. Sales by vending machines that are open to the public, even though on government property, are taxable.|
|Correctional Facilities||Sales by a vending machines in any local, state, or federal correctional facility that serves or furnishes food or beverage to inmates and employees of the correctional facility are not taxable.||The exemption is limited to sales to inmates and employees. Sales by a vending machine that is open to the public, even though located on the correctional facility’s property, are taxable.|
See 18 V.S.A. § 1902 for the definition of a licensed hospital or contact the Department for guidance.
|Sales by vending machines in licensed hospitals are not taxable if the vending machine contents are prepared by hospital employees.||Sales by vending machines in licensed hospitals are taxable if the contents in the machine are not prepared by hospital employees.|
|Trains, Buses, or Airplanes||Sales by vending machines located in trains, buses, or airplanes transporting passengers for hire are not taxable.||Sales by vending machines located in train stations, bus stations, or airports are taxable.|
|Summer Camps for Children||Sales by vending machines located in summer camps for children are not taxable while they are operating as summer camps for children.||Sales made by vending machines located at the camps are taxable when camps are not operating as summer camps for children.|
Continuing Care Retirement Community
See 8 V.S.A. § 8001 for the definition of certified continuing care retirement community or contact the Department for guidance.
|Sales by vending machines located on the premises of certified continuing care retirement communities are not taxable.|
|Nursing Home and Similar Care Facilities||Sales by vending machines located at nursing homes, residential care homes, assisted living residences, homes for the terminally ill, therapeutic community residences, or independent living facilities are not taxable if the contents are prepared by the employees, volunteers, or contractors.||Sales by vending machines located at nursing homes, residential care homes, assisted living residences, homes for the terminally ill, therapeutic community residences, or independent living facilities are taxable if the contents are not prepared by the employees, volunteers, or contractors.|
|VENDING MACHINE SALES TO SPECIFIC CUSTOMERS|
|Sales to SNAP Beneficiaries||Purchases made using 3SquareVT/SNAP resources are not taxable if the machine is equipped to accept EBT cards.||SNAP beneficiaries who pay with cash, even if the cash is an EBT benefit, will pay the tax.|
|Vending Machine Sales by Employers|
|If an employer is not eligible for an exemption as previously described and does not use a third-party distributor, then the employer must charge tax on purchases from vending machines it operates.|
|Vending Machine Sales by Nonprofits|
|Sales by vending machines located on the premises of nonprofit corporations and associations are not taxable if all of the following apply: •The nonprofit is organized and operated exclusively for religious or charitable purposes •The sale furthers the purposes of the organization •The net proceeds are used exclusively for the purposes of the organization||A third party vendor must charge tax on vending machine sales located on the premises of a nonprofit if any of the net proceeds go to a person or organization other than the nonprofit.|
|Use of Vending machines by a Nonprofit for an Event||Sales by vending machines are not taxable when nonprofits operate vending machines at bazaars, fairs, picnics, church suppers, or similar events, on or off premises. To use this exemption, nonprofits can only sell taxable meals at these types of events for four days or fewer per calendar year. Nonprofits may rent vending machines for use at events, but they must keep all of the net proceeds. No exemptions are available if third parties keep the net proceeds from events because sales then are considered to be by the third parties and not the nonprofits. See Vermont law at 32 V.S.A. § 9202(10)(D) (VII).||Sales made by an organization required to have a meals and rooms license or otherwise required to have a license because its selling events are more than four days during the calendar year, there is no exemption. Sales by vending machines must charge tax.|
LAWS, REGULATIONS AND GUIDANCE
Technical Bulletin 25 Requirement to Collect Local Option Meals & Alcoholic Beverages Tax and Local Option Rooms Tax