When a seller does not charge the buyer Vermont Sales Tax on an item taxable in Vermont, the buyer must pay Vermont Use Tax. Taxable items sold over the internet, by mail-order, by phone, or bought out-of-state and used in Vermont generally qualify.
Vermont Sales Tax and Vermont Use Tax work together to ensure Vermont taxpayers pay the right amount of tax to help support the services the state provides to Vermonters. Sales and use tax applies to individuals (residents and nonresidents) and businesses. Use tax has the same rate of 6%, rules, and exemptions as sales tax.
Vermont Sales and Use Tax is “destination-based.” One of the following must happen for the purchased item to be subject to sales and use tax:
- The buyer takes possession of the item in Vermont.
- The buyer has the item delivered or shipped to Vermont.
- The buyer purchases the item outside of Vermont and then brings it into Vermont to use.
Please note: Act 73 of 2017 requires vendors to report to the Department of Taxes certain transactions on which no sales tax was paid.
How to Calculate Use Tax
Calculate your use tax by multiplying the 6% rate by the total of your purchase prices.
Please note: The purchase price includes any shipping/delivery charge. If you do not have accurate records, you can do the following:
- For all individual purchases that cost less than $1,000 each, use the Use Tax Reporting Table below to estimate your use tax
- For individual purchases that cost $1,000 or more each, calculate the exact use tax by multiplying the purchase price of each item by the 6% rate
- If you have a combination of both types of purchases, you can use the Use Tax Reporting Table to estimate the amount you owe on your purchases which are less than $1,000 each. Calculate the exact amount you owe on your purchases over $1,000 and add this amount to your estimated amount from the table.
How to Make a Payment
You can file and pay online. myVTax will walk you through the process of calculating your use tax.
Calculate and pay Use Tax for the prior year on your IN-111, Vermont Income Tax Return. If you don’t know the exact amount of purchases, there is a helpful chart in the IN-111 Instructions that you may use to estimate your use tax.
|FS-1035||Vermont Use Tax for Individuals|
|FS-1028||General Guidelines on Sales Tax: What Is Taxable and Exempt?|
Frequently Asked Questions
Why does Vermont have a use tax?
Use tax helps our businesses in Vermont compete with online businesses and businesses in states, such as New Hampshire, that do not have a sales tax or a lower sales tax. It “levels the playing field,” so to speak, creating a fairer marketplace for businesses in Vermont. Other states impose use tax for the same reason.
Do I have to pay use tax?
Yes. Under Vermont law at 32 V.S.A. § 9773, individuals and businesses must pay Vermont Use Tax.
How do I know when to pay use tax?
Ask yourself these questions:
- Is the item purchased subject to Vermont Sales Tax? If yes, continue to question 2. If no, there is no use tax to pay.
- Was the item you purchased delivered to Vermont or did you take possession of the item in Vermont or did you bring the item into Vermont? If yes to any one of these situations, continue to question 3. If no to all three of the situations, there is no use tax to pay.
- Did the seller charge 6% Vermont Sales Tax? If yes, there is no use tax. If no, you must pay Vermont Use Tax.
- Did the seller charge sales tax at a lower rate than 6%? If yes, you owe the difference. If the seller charged you a higher rate, then you do not owe use tax.
Example: if you made an online purchase of an item taxable in Vermont and had it delivered to you in Vermont, then the item is subject to Vermont Sales & Use Tax. On the other hand, if you had the same item sent to your friend in New York, the item is not subject to Vermont Sales & Use Tax (though the online seller might charge you the sales tax for New York).
What is exempt from use tax?
If an item is exempt from sales tax in Vermont, it is exempt from use tax. Some categories of exempted items that most people are aware of are clothing and shoes, food, over-the-counter drugs, and medical equipment and supplies. It is impossible to list every item exempt from tax sold in an ever-evolving marketplace, but many categories of tangible personal property are listed in Vermont statute and regulation. Review what is taxable and exempt? If in doubt about an item you’ve purchased, contact the Vermont Department of Taxes at (802) 828-2551.
How do I figure out how much I owe?
Ideally, over the course of the year, you should keep good records of taxable purchases on which sales tax was not charged to you by the seller. We know most people don’t do this. If you have not kept records of your taxable purchases, Vermont law allows you to estimate use tax based on your adjusted gross income (AGI). We provide a chart to estimate use tax based on your AGI. We provide a chart in the IN-111 Instructions to estimate use tax based on your AGI. For each item over $1,000, however, you must calculate the exact use tax.
My town has a local option tax. Do I have to add local option tax when I pay use tax?
No. Local option tax only applies to sales tax. When you pay use tax, only pay the 6% use tax rate. Do not add the 1% local option tax.
I made a purchase in another state, such as New Hampshire, and was not charged any sales tax. Do I owe Vermont Use Tax?
Yes. Since you did not pay the 6% Vermont Sales Tax at the time of purchase, you must file and pay the 6% Vermont Use Tax on your Vermont personal income tax return. This often occurs when you buy an item taxable in Vermont at a store located over the border in New Hampshire, which has no sales tax.
For example, you might decide to buy a new appliance, which is subject to Vermont Sales Tax, at a New Hampshire home improvement store. When you transport your new appliance or have it delivered to your home in Vermont, you must then declare the 6% use tax on your next personal income tax return and pay the tax.
I made a purchase in another state and was charged sales tax at a lower rate than Vermont’s rate. Do I still owe Vermont Sales Tax?
Yes, but you only owe the difference between the two rates. For example, suppose you purchased a book in another state for $5 and paid that state’s 4% sales tax or $.20. You bring that book into Vermont. The Vermont rate is 6% or $.30. You must pay the difference of $.10 as use tax.
How do I know if something I buy is subject to Vermont Use Tax?
Under Vermont law, “tangible personal property” is taxable unless specifically exempted, such as most clothing and food. “’Tangible personal property’ means personal property which may be seen, weighed, measured, felt, touched or in any other manner perceived by the senses.” 32 V.S.A. § 9701 (7)
It is impossible to list every item subject to Vermont Sales and Use Tax sold in the an ever-evolving marketplace, but many categories of tangible personal property are listed in Vermont statute and regulation. Review what is taxable and exempt. If in doubt about an item you’ve purchased, contact the Vermont Department of Taxes at (802) 828-2551.
Are alcoholic beverages subject to Vermont Sales and Use Tax?
Yes. Alcoholic beverages are taxable. They are not exempted as food and food products under Vermont law at 32 V.S.A. §§ 9701, 9743. Similarly, malt and vinous beverages as described in 7 V.S.A. § 2(14) and (23) are subject to sales and use tax. Typically, you would be charged sales tax on alcoholic beverages in a Vermont grocery store, convenience store, or state liquor store. If you do not pay sales tax, you must file and pay use tax on your next personal income tax return.
Note: If you are served alcoholic beverages in a restaurant or bar for immediate consumption, you would pay the 10% Vermont Alcoholic Beverage Tax and not the 6% Vermont Sales Tax, so no use tax would be due.
I made a purchase in another state and was charged sales tax at a higher rate than Vermont’s rate. Does Vermont pay me the difference between the two rates?
No. If you are taxed at a higher rate in another state, there is no refund or rebate of the difference between the two rates. Vermont does not expect you to pay Vermont Sales Tax in addition to what you have already paid at a higher rate of sales tax in another state. In other words, there is no use tax due to Vermont in this situation.
LAWS, REGULATIONS AND GUIDANCE
Vermont Statute 32 V.S.A Chapter 233
32 V.S.A. Chapter 225 Vermont Sales and Use Tax Regulation § 1.9701