Vermont Sales Tax
Vermont Sales Tax At a Glance
State rate: 6%
Maximum combined rate: 7%
Tax Holidays: None
Governing Body: Vermont Department of Taxation
Whether your small business is based in Vermont or you simply make sales of tangible personal property to customers in the state regularly, it’s important for you to know what the state’s sales tax laws are and how they apply to you. This includes understanding the applicable tax rates at various locations throughout the state, knowing which rate applies to any given sale, and understanding the requirements for triggering a nexus condition in Vermont.
Vermont Sales Tax Rates
The state sales tax rate in Vermont is 6%, and local jurisdictions have the option of adding another 1% in the form of a Local Option tax. This means that the applicable tax rate for purchases in Vermont will be either 6% or 7%, depending on your location or the final destination of the product.
Vermont law stipulates that the tax rate for any given sale is at the location where the purchaser takes possession of the product. That means if you have a physical store, you will charge the rate for the municipality you’re located in to all of your customers, regardless of the part of the state they live in.
However, if you’re shipping goods, either from within Vermont or out-of-state, to customers in Vermont, the appropriate tax rate to charge will be that of the destination of the goods. It’s important to note that shipping and handling charges are taxable in Vermont as well, as long as the item being shipped is taxable.
There are a few additional tax rates in Vermont for specific types of items. These include a 9% tax on prepared food, restaurant meals, and lodging and a 10% tax on alcoholic beverages served in restaurants.
Sales Tax Nexus Regulations in Vermont
Any business with a physical place of business in Vermont is considered to have a nexus, or significant presence, in the state for sales tax purposes. However, even if you don’t have an actual storefront or office, you may still be considered to have a significant enough relationship with the state to be required to collect and remit sales tax.
Some other situations or relationships that can trigger nexus include:
- The display of advertising in the state, or the distribution of advertising materials or flyers, or advertising through the use of radio or television ads
- Soliciting orders through mail, computer data base, cable, or other communication systems from outside of the state to make sales to customers within the state, as long as total revenue from those sales is at least $50,000 in any previous 12-month period
- Engaging a contractor, employee, or other agent to represent your business in the state
- Keeping goods in a warehouse in the state
This is not an exclusive list of the conditions that can create a nexus for your company in Vermont, and some combination of other factors may result in a nexus as well. Vermont also has a click-through nexus law that requires any remote seller who has agreements with Vermont residents to refer customers through any means, and that relationship results in at least $10,000 in total sales in the previous year, to register to collect and remit sales taxes to the state.
Vermont’s economic nexus law requires remote sellers who make $100,000 or more in gross sales or 200 or more transactions in a calendar year to collect sales tax as well.
In Vermont, all sales of tangible personal property are subject to sales taxes unless the purchaser has specifically obtained an exemption certificate from the state. These exemptions certificates are given to certain types of organizations, as well as for specific types of goods, including but not limited to:
- Forestry and wood products
- Agricultural fertilizer, pesticides, machinery and equipment
- Manufacturing, publishing, research and development
This is not an exhaustive list, and there are forms on the website of the Vermont Department of Taxes to apply for each particular type of certificate.
Other items are specifically tax exempt, and these include:
- Medical devices and services
- General clothing
- Machinery raw materials, and utilities and fuel used in manufacturing machinery
- Janitorial and transportation services
Digital products are specifically taxed in Vermont, along with canned software, regardless of whether it’s delivered on tangible media or via download. However, custom software is exempt from sales tax, which is also true of the customization of canned software. Most services are not taxed in Vermont, except for telecommunications services and certain utilities.
Registration and Filing
Before you begin making taxable sales in Vermont, you’ll have to register with the state for a permit to collect and remit sales tax. Registration is free, and it can be done online or by downloading a form from the state website and mailing it in.
Vermont is a full member of the Streamlined Sales and Use Tax Agreement (SSUTA), so you can register through that website as well. Registering with the SSUTA requires that you register with all member states simultaneously, and so this option may or may not make sense for you depending on your situation.
You are encouraged to file and pay online, although it’s still possible to complete this process through the mail. If your tax liability for the year is more than $100,000, though, you must file and pay online.
Due Dates and Penalties
The state will assign you a filing frequency based on your estimated annual tax liability. Typically, if your annual liability is less than $500, you will file quarterly, and if your liability is anticipated to be greater than that, you will file monthly. For those with very small annual tax liability, there is also an annual filing option.
Returns and payments are due on the 25th of the month following the close of the period in question. The one exception is that monthly returns for January sales filed in February are due on the 23rd. Returns for annual filers are due on January 25th of the following year. If the due date falls on a weekend or a holiday, returns and payments are due by the next business day.
Monthly Due Dates
Quarterly Due Dates
|January – March (Q1)||April 25|
|April – June (Q2)||July 25|
|July – September (Q3)||October 25|
|October – December (Q4)||January 25|
A penalty of 5% of the total tax due will be assessed per month for any late payments. A 5% per month penalty will also be charged for a failure to file a tax return, with a maximum possible penalty of 25% of the total tax due.
Vermont Sales Tax Software
Although the regulations surrounding what’s taxable in Vermont are relatively straightforward, it can still be difficult to stay on top of all aspects of recording, collecting, filing and remitting taxes on your qualifying sales to Vermont customers. That’s especially true if you’re selling in multiple states at once. Fortunately, the tax calculator and tools provided by TaxTools software can make this entire process much easier and more efficient for you.
TaxTools will monitor the regulations in each state for you, making sure you’re up to date on any changes that may impact your small business. It can also produce various reports, file your tax returns for you, and ensure you’re collecting at the right rate on each sale. It will integrate smoothly with whatever eCommerce platform you use, and best of all, it gives you peace of mind that you’re in tax compliance with all state sales tax regulations, so you’re free to focus on building your business.
So if you’re ready to learn more about how TaxTools can help streamline your business operations, click here to sign up for a free trial today.
Last updated September 2023