Owning a business in Vermont comes with plenty of rewards and a few responsibilities, too. One of those is collecting and remitting sales tax correctly. While Vermont’s sales tax system is more straightforward than many other states, added taxes on meals, alcohol, and lodging can make compliance a little more complicated. Whether you’re running a café in Burlington, a gift shop in Stowe, or a general store in Montpelier, understanding Vermont’s sales tax rules is key to avoiding costly mistakes. Below, we’ll walk you through how it all works and how DAVO by Avalara can simplify the process for you.
Does Vermont have sales tax?
Yes, Vermont imposes a sales and use tax on most tangible personal property, certain digital goods, and some services sold at retail within the state. The tax is collected by businesses and remitted to the Vermont Department of Taxes.
Like other states, Vermont’s sales tax is a pass-through tax, meaning the burden falls on the customer, while businesses are responsible for collecting, reporting, and remitting the correct amount.
What is the sales tax in Vermont?
Vermont has a 6% state sales tax rate. In addition, local municipalities can impose an optional 1% local sales tax, bringing the total sales tax rate in some areas to 7%.
Examples of local rates:
- Montpelier: 6% state + 1% local = 7% total
- Shelburne: 6% state + 1% local = 7% total
- Essex: 6% state + No local tax = 6% total
It’s important to note that not everything is taxed at the same rate. Vermont applies special tax rates to certain items and industries. For example:
- Meals and rooms are subject to a 9% tax, which applies to restaurants, takeout, and hotel stays.
- Alcoholic beverages served for immediate consumption are taxed at 10%.
- Tobacco products are also taxed differently, with specific rates depending on the product type.
Because these rates vary, it’s important for business owners, especially those in hospitality or retail, to understand which rate applies to each transaction. Always visit Vermont’s Department of Taxes for the current tax rates and charts.
If you own or operate a restaurant in Vermont, sales tax can quickly become complicated. Meals and alcoholic beverages are taxed differently from the standard 6% applied to most retail goods. Managing these multiple rates manually can easily lead to mistakes or missed filings.
That’s where DAVO by can help. DAVO automatically collects, files, and pays your sales tax, ensuring that each type of transaction is charged correctly and that your payments are submitted on time, every time, garantizado,. It’s one less thing to worry about when running your restaurant.
How to calculate sales tax in Vermont?
Unlike many other states, Vermont keeps its sales tax structure simple. While most states allow counties or cities to set their own local rates, creating a patchwork of different totals that can be tricky for multi-location businesses to manage, Vermont’s sales tax is generally either 6% or 7%. This depends on the locality as well as the type of item purchased.
To calculate your sales tax, identify the correct rate and multiply the rate by the taxable sale amount. For example, a sale of $100 in Burlington, Vermont, is subject to 7% sales tax. Take $100 and multiply it by 0.07, which would give you $7 in sales tax.
Use our sales tax calculator
To instantly find the amount of sales tax you owe, use our calculadora de impuestos sobre las ventas. Enter the rate of either 7% or 6% depending on the location of the sale, and the taxable sale amount. For restaurant owners, the rate will be different based on the meals and alcoholic beverages provided at your establishment.
What is subject to sales tax in Vermont?
In Vermont, most tangible personal property is taxable, along with certain goods and services that don’t fall under exemptions. Some of the items you can expect to be taxed include:
- Electronics, furniture, and appliances
- Personal goods like tools, household items, and non-prescription medical devices
- Prepared food and drink
- Alcohol sold for on-premises consumption (taxed at 10%)
- Rentals of tangible personal property
- Some digital or software products, depending on how they are delivered or used
Because Vermont’s tax law allows exemptions for many other goods, it’s important to review whether the product you’re selling is explicitly taxable. Vermont’s Department of Taxes provides a general guideline of taxable and exempt items.
What items are exempt from sales tax in Vermont?
Vermont offers a variety of sales tax exemptions designed to ease the burden on essential goods and support key industries such as healthcare, agriculture, and education. Some of the most common tax-exempt items include groceries, prescription medication, clothing, agricultural supplies, and textbooks.
Is there sales tax on clothing in Vermont?
Vermont is one of the few states that does not charge sales tax on most clothing and footwear, making it a shopper-friendly state for apparel purchases. Everyday clothing items like coats, hats, neckties, uniforms, and athletic wear are tax exempt, as are most types of footwear, including boots and shoes.
However, not everything you wear qualifies for the exemption. Accessories such as belts, jewelry, handbags, and costume masks are taxable, since the state does not consider them essential apparel. In other words, if the item’s primary purpose is decorative rather than functional, you’ll likely need to collect sales tax on it.
For retailers, it’s important to carefully distinguish between taxable accessories and exempt clothing. If you sell both, make sure your point-of-sale system correctly applies Vermont’s sales tax rules, or let DAVO handle it automatically for you. DAVO ensures sales tax is collected accurately on every transaction and remitted on time, so you can stay compliant without the stress.
Does Vermont have sales tax on food?
In Vermont, most groceries for home consumption are exempt from sales tax, making it easier for families to save on everyday essentials. Items such as fruits, vegetables, dairy products, and pantry staples are all tax-free when purchased from grocery stores or supermarkets.
However, there are a couple of important exceptions. Soft drinks are the only grocery items that are subject to sales tax, even when purchased for home use. In addition, prepared meals and ready-to-eat foods, such as takeout, restaurant meals, and food sold for immediate consumption, are taxable at a higher meals and rooms rate rather than the standard sales tax rate.
Keeping track of which items are taxed as meals versus standard sales can get confusing. That’s where DAVO helps. DAVO automatically sets aside and remits the correct sales tax, making it easier to ensure you’re applying the right rate to every sale.
Make your sales tax less taxing with DAVO.
Does Vermont charge sales tax on services?
In Vermont, most services are not subject to sales tax. Taxable services generally include things directly related to tangible goods, such as repair and maintenance services, lodging, and prepared food services. On the other hand, professional services like accounting, legal, and medical services are exempt from sales tax, as are personal care services that don’t involve tangible products.
How should businesses manage tax-exempt sales in Vermont?
In Vermont, there are several types of sales tax exemptions, but most retailers will commonly encounter three main categories: entity-based exemptions, use-based exemptions, and product-based exemptions. For entity-based, use-based, or resale exemptions, the buyer must provide the seller with a valid exemption certificate at the time of purchase. Sellers are required to keep these certificates on file for at least three years from the date of the last sale covered by the certificate. While exemption certificates are not submitted to the Vermont Department of Taxes, sellers must produce them if requested during an audit. For more details on exemptions, visit the Department of Taxes’ sales tax exemption page.
Does Vermont have a sales tax holiday?
No, Vermont does not currently have a sales tax holiday. Unlike some neighboring states, Vermont has not enacted a designated period during which certain items can be purchased tax-free.
What are businesses responsible for?
In Vermont, businesses that sell taxable goods or services are responsible for collecting and remitting sales tax to the Vermont Department of Taxes. This applies to both in-state retailers and remote sellers who meet Vermont’s economic nexus threshold of $100,000 in annual sales the previous year.
Managing Vermont sales tax doesn’t have to be stressful. DAVO automates the entire process, from daily sales tax collection to filing and payment, so you never have to worry about missing a deadline or miscalculating a payment. DAVO works directly with your POS system, ensuring that every dollar collected is set aside and automatically remitted to the Vermont Department of Taxes on your behalf.
How to register for a Vermont sales tax license?
Before collecting any sales tax, businesses must register for a Vermont Business Tax Account and apply for a license. You can register online through the myVTax portal, by mail, or by fax. To register by mail or by fax, you’ll need to complete form BR-400, and you may fax the completed form to 802-828-5787. For more details on how to register, visit Vermont’s Department of Taxes registration page.
What are the filing requirements for Vermont sales tax?
You can file Vermont sales tax online through the myVTportal. Even if you made no taxable sales during a filing period, you’re still required to submit a “zero return” to remain compliant. When filing, you need to report your total gross sales, taxable sales, nontaxable sales, and the amount of tax collected during the reporting period. The portal will automatically calculate the total tax due based on your entries.
How to pay Vermont sales tax?
Most businesses pay Vermont sales tax online, where you can make payments electronically using ACH debit or a credit card with a nonrefundable 3% fee. If you prefer, you can also mail a check or pay in person at the Vermont Department of Taxes. For more details, visit the Vermont Department of Taxes website for filing and payment information.
Vermont sales tax due dates
In Vermont, most businesses file and pay sales tax monthly or quarterly, depending on their total sales volume.
- Monthly filers must submit returns and payments by the 25th of the following month. The only exception is February, where payment is due on the 23rd.
- Quarterly filers must file by the 25th of the month after the quarter ends. For example, April 25, July 25, October 25, and January 25.
However, if the due date falls on a weekend or holiday, payments are due the following business day. Be sure to refer to the Vermont Department of Taxes calendar for exact filing and payment dates.
Vermont does not offer a discount for early or on-time filing, so it’s especially important to submit your returns and payments promptly to avoid penalties or interest. Visit our guide on sales tax discounts to learn which states offer compensation for timely filings.
What is the penalty for filing Vermont sales tax late?
Businesses that file or pay their Vermont sales tax late may face both penalties and interest. The penalty for late filing is 5% of the unpaid balance for each month the return is overdue, up to a maximum of 25%. Interest also begins to accrue on any unpaid tax from the original due date until payment is received. The interest rate is updated annually by the Vermont Department of Taxes. If a return remains unpaid for more than 60 days, additional penalties may apply, including a $50 late filing penalty, even if no tax is owed.
Let DAVO handle Vermont sales tax for you
Managing Vermont sales tax can be tricky. Especially when you’re juggling local add-on rates, filing schedules, and ever-changing rules about what’s taxable. Between running your business, serving customers, and staying on top of paperwork, sales tax can easily slip through the cracks. That’s where DAVO steps in.
DAVO takes the stress out of sales tax by automating the process. It connects directly to your existing POS system, automatically sets aside the sales tax you collect daily, and files and pays it for you, on time, every time, garantizado,. Whether you’re running a café in Burlington, a ski lodge restaurant in Stowe, or a boutique in Middlebury, DAVO ensures your Vermont sales tax is managed accurately and without the worry of missed deadlines or penalties.
With DAVO, you’ll never have to scramble before a due date or worry about whether you’ve saved enough to cover your sales tax bill. You’ll get peace of mind knowing it’s handled securely and automatically in the background, while you focus on what matters most, growing your business and taking care of your customers.
Choose your POS system to get started with DAVO.
Vermont Department of Taxes Information:
802-828-2865
