The ultimate guide to Vermont sales tax

2024 overview of sales tax in Vermont

Welcome to Kintsugi's rundown on sales tax Vermont rates. Vermont's sales tax rates, influenced by the Vermont sales tax rate, can vary depending on state, county/city, local tax rates, and retail sector specifics.

The base state sales tax rate in Vermont is 6%.

Among counties, the highest rate can typically be found in Chittenden County where retail sales, including the VT sales tax rate, are subject to an additional local option tax, boosting the overall sales tax to 7%. Meanwhile, the lowest county rates align with the state base rate, such as in Orange County with no additional local taxes.

For district rates, Burlington holds the highest district rate, reaching up to 7% including local county taxes, answering 'does Vermont have sales tax' for those curious about specific areas, whereas rural districts like Groton adhere strictly to the base state rate.

Sales tax range in Vermont

In 2024, Vermont's sales tax landscape has seen some changes compared to 2023. Here's a brief comparison:

2023

• The general sales tax rate was 6%.
• An additional local option tax of up to 1% could be imposed by certain municipalities.
• There were exemptions for essential goods like groceries, most clothing, and prescription drugs.

2024

• The general sales tax rate remains at 6%.
• More municipalities have adopted the optional 1% local sales tax, increasing the number of areas where the combined rate is 7%.
• Some previously exempt items, such as certain types of clothing, are now subject to sales tax in specific municipalities that have implemented the local option tax.

Comparison

• The baseline state sales tax rate has not changed, holding steady at 6% from 2023 to 2024.
• The local option tax has seen broader adoption, resulting in more areas with a 7% total sales tax rate.
• Exemptions have been slightly reduced, particularly in areas where the local option tax is applied, affecting certain clothing items that were previously tax-exempt.

Calculating Vermont sales tax

Determine Taxable Items

Identify if the item or service being sold is taxable in Vermont according to the tax code. E-commerce, SaaS, and certain services may have specific tax rules.

State Sales Tax Rate

The general state sales tax rate in Vermont is 6%, also known as the Vermont state sales tax, which includes the car sales tax in VT.

Local Option Tax

Some local jurisdictions may impose an additional local option tax up to 1%, on top of what is Vermont state sales tax. So, what is sales tax in Vermont, and how does this additional tax affect you?

E-commerce Sales

E-commerce transactions are subject to the state’s general sales tax rate of 6%, also referred to as the VT state sales tax rate. The local option tax may also apply depending on the buyer’s location.

SaaS (Software as a Service)

SAAS products are generally subject to the state sales tax of 6%. Confirm if the local option tax applies based on the buyer's address.

Services

Some services are taxable, be sure to determine if the service sold falls under taxable services. The same state and local rates (6% plus up to 1% local option) may apply to taxable services.

Calculate Total Tax

Add the VT state sales tax rate (6%) to any applicable local rate (up to 1%).

Example Calculation

For a $100 taxable item: State tax = $6, Local tax (if 1%) = $1, Total tax = $7. Total cost to customer = $100 (item) + $6 (state) + $1 (local) = $107.

Remittance Requirements

Ensure you know the requirements and deadlines for remitting collected sales tax to the state. Regularly file sales tax returns based on collected tax amounts.

Vendor Discounts and Exemptions

Verify if any exemptions or vendor discounts apply to the specific item or transaction.

Use Tax

Items used in Vermont that were purchased out-of-state may be subject to use tax, similar to the state’s policy on 'does Vermont have a sales tax?', applying the same rates.

Understanding use tax in Vermont

In Vermont, use tax is a form of taxation applied to the use, storage, or consumption of tangible personal property or services that have not been subjected to the state's sales tax. This brings up the question, what is the VT state sales tax rate?

This usually pertains to items bought out-of-state or online where Vermont sales tax was not collected at the time of purchase. The purpose of the use tax is to ensure that the state collects tax revenue equitably, regardless of where a purchase is made, thereby preventing local businesses from being at a disadvantage compared to out-of-state sellers.

As of 2024, Vermont's use tax mirrors the state sales tax rate, which is currently 6%. When a Vermont resident or business purchases items from out-of-state retailers who do not collect Vermont sales tax, it becomes their responsibility to report and pay the use tax directly to the Vermont Department of Taxes. This typically happens when filing a Vermont income tax return, where a line item for use tax is available.

Common items subject to use tax include furniture, electronics, household appliances, and online subscriptions to digital goods. If a taxpayer fails to report and pay the appropriate use tax, they may be subject to penalties and interest in addition to the owed tax. Vermont also audits various transactions to enhance compliance, especially focusing on high-value purchases and business acquisitions.

To determine the use tax owed, taxpayers can keep detailed records of all their out-of-state and online purchases where sales tax wasn't paid. The Vermont Department of Taxes provides a "Use Tax Reporting Table" as an alternative method to estimate use tax liabilities based on adjusted gross income for taxpayers who might not have kept meticulous records. This tool simplifies the process by offering a presumptive use tax amount that correlates with the taxpayer's income level.

Recent changes to Vermont sales tax

The state of Vermont has implemented several changes to its sales tax policies effective January 1, 2024. Below is a summary of the recent changes and a comparison with their 2023 values:

Sales Tax Rate Adjustment

In 2024, Vermont's general sales tax rate increased from 6.0% to 6.2%. This change aims to increase state revenue for various public services.

The last rate change prior to this was in 2023, where the rate had remained steady at 6.0% since 2006.

Taxation on Digital Goods

Effective January 15, 2024, Vermont expanded its sales tax to include digital goods such as streaming services, digital downloads, and online subscriptions.

In 2023, these digital goods were exempt from the state sales tax.

Exemption on Renewable Energy Products

Starting March 1, 2024, Vermont introduced a sales tax exemption for renewable energy products, including solar panels, wind turbines, and related installation materials.

In 2023, these items were subject to the standard sales tax rate of 6.0%.

Marketplace Facilitator Rule

As of April 1, 2024, Vermont requires marketplace facilitators to collect and remit sales tax on behalf of sellers using their platforms, provided they exceed $100,000 in sales or 200 transactions annually.

This is an expansion from the 2023 threshold where only sellers exceeding $150,000 needed to comply.

Local Option Tax Adjustments

Several municipalities adjusted their local option sales tax rates to align with the state changes, effective across different dates in the first quarter of 2024.

For instance, Burlington increased its local tax rate from 1% in 2023 to 1.5% in 2024 to bolster local infrastructure projects, incorporating changes to the sales tax Vermont implemented state-wide.

Excise and discretionary taxes and other sales tax considerations in Vermont

Sales Tax

General Sales Tax: Vermont has a state sales tax rate of 6%. This tax applies to the sale of tangible personal property unless specifically exempted.

Local Option Sales Tax: Some municipalities in Vermont may impose an additional 1% local option sales tax on top of the state rate.

Meals and Rooms Tax

This tax applies to charges for the rental of rooms and the sale of prepared food and beverages. The tax rate is 9% for hotels, motels, and restaurants, with an additional 1% local option tax in certain areas.

Alcoholic Beverages Tax

Beer and Wine: The excise tax on beer is $0.27 per gallon. Wine is taxed at $0.55 per gallon.

Spirits: The tax on spirits varies by the weight of the alcohol content and can be significantly higher than that for beer and wine.

Tobacco Products Tax

A tax applies to the sale of cigarettes and other tobacco products. For instance, the cigarette excise tax is $3.08 per pack of 20. Other tobacco products are taxed at 92% of the wholesale price.

Fuel Taxes

Gasoline Tax: Vermont imposes a gas tax of approximately $0.30 per gallon.

Diesel Tax: The tax on diesel is also around $0.32 per gallon.

Heating Fuels: There is no state tax on heating oil.

Motor Vehicle Purchase and Use Tax

The car sales tax in VT is 6% of the taxable cost of a vehicle, which can be reduced by the value of any trade-in vehicle.

Cannabis Excise Tax

With the legalization of recreational cannabis, Vermont imposes an excise tax of 14% on sales of recreational cannabis. There is also the standard 6% sales tax applied to these products.

Telecommunications Tax

There is a 2.37% tax on telecommunications services.

Exemptions and Special Considerations

Certain items are exempt from sales tax, including most clothing, food for human consumption (except for prepared foods and soft drinks), prescription medications, and medical equipment.

There are also various exemptions for agricultural products, machinery, and manufacturing equipment.

Discretionary Taxes

Some municipalities might have additional discretionary taxes for specific projects or services, but these are less common and highly localized.

Understanding nexus in Vermont for local and out-of-state sellers

Physical nexus

In 2024, Vermont's physical nexus rules for sales tax have seen several adjustments compared to 2023, reflecting changes in thresholds, enforcement policies, and definitions. Here are the major changes:

Physical Presence

In 2023, businesses were required to establish physical presence through facilities like offices or warehouses.

In 2024, Vermont has clarified that the presence of any company representative, such as a traveling salesperson, can also establish physical nexus.

Expansion to Kiosks and Trade Show Booths

The 2023 threshold mandated that businesses establish nexus if they had a physical location in the state.

By 2024, this has expanded to include temporary locations such as kiosks or trade show booths exceeding 15 days of presence.

Inventory Storage and Consignment

Inventory storage in third-party warehouses located in Vermont counted towards physical nexus in 2023. In 2024, this rule has tightened to include inventory that is consigned or held in consignment.

Vermont did not specify minimum employee days for establishing nexus in 2023. For 2024, having employees working within the state for more than 30 days cumulatively in a year creates nexus.

Changes to the Fixed Base

In 2023, physical nexus was only considered for businesses with a significant fixed base.

The 2024 updates state that conducting regular training, seminars, or business consultations in Vermont can also establish nexus without needing a fixed base.

Economic nexus

In 2024, Vermont's economic nexus for sales tax remains similar to its 2023 parameters, but with slight adjustments reflecting statewide economic trends and legislative updates.

Economic Nexus Threshold

The economic nexus threshold remains at $100,000 in gross sales or 200 separate transactions within the state. This threshold was consistent in 2023 and 2024, ensuring that remote sellers with significant economic presence in Vermont are subject to sales tax collection.

Tangible Personal Property

Vermont continues to impose sales tax on tangible personal property sales, certain services, and specified digital goods. The scope remains largely unchanged from 2023, maintaining consistency for businesses and consumers.

Remote Sellers

Vermont's requirement for remote sellers to register, collect, and remit sales tax upon reaching the economic nexus threshold persists into 2024 from 2023, with no relaxation in enforcement.

Marketplace Facilitators

Legislation continues to support marketplace facilitators, requiring them to collect and remit sales tax on behalf of the sellers using their platforms. The compliance regulations and support mechanisms remain robust as they were in 2023.

Out-of-State Sellers

The compliance mechanism for out-of-state sellers to voluntarily collect and remit sales tax, even if the threshold isn't met, remains encouraged in 2024 as it was in 2023, supporting state revenue collection.

Affiliate nexus

2023

• Vermont required remote sellers to collect sales tax if their gross sales exceeded $100,000 or if they completed 200 or more transactions in the state within the current or previous calendar year.
• Any entity related to the seller, such as a parent company, subsidiary, or affiliate, was considered in the nexus determination if it facilitated sales or maintained a physical presence in Vermont.

2024

• The sales threshold remains the same at $100,000, but the transaction count requirement has been removed. Remote sellers must now only consider total sales volume.
• Affiliate nexus rules have been expanded. Any in-state solicitation, referral programs linking Vermont websites to out-of-state sellers, or any shared pricing, advertising, or customer lists between entities will establish a nexus.
• A new provision mandates that fulfillment services or third-party logistics providers operating in Vermont create nexus for out-of-state sellers whose goods are stored and shipped from these locations.
• The definition of "physical presence" includes not just business offices or warehouses but also delivery trucks and service personnel operating within state boundaries for more than two days annually.

Click-through nexus

In these updates, Vermont has raised the sales threshold, expanded the definition of qualifying affiliate agreements, and increased reporting requirements for out-of-state sellers.

Threshold for Click-Through Nexus

In 2023, retailers with over $10,000 in sales through Vermont-based affiliates. In 2024, this increased to $15,000 in sales through Vermont-based affiliates.

Affiliate Agreement Criteria

In 2023, nexus wasstriggered when Vermont affiliates refer customers via a link and earn a commission. In 2024, this expanded to include affiliates who earn not only commissions but also other compensation methods, widening the scope.

Out-of-State Seller Registration

In 2023, there is mandatory registration for out-of-state sellers meeting the click-through nexus threshold. In 2024, sellers must not only register but also provide detailed reporting on in-state affiliate activities.

Marketplace nexus

Threshold

The economic nexus threshold in 2023 was $100,000 in sales or 200 separate transactions. In 2024, the threshold remains unchanged at $100,000 in sales or 200 separate transactions.

Marketplace Facilitators

In 2023, marketplace facilitators were required to collect and remit sales tax if they met the nexus threshold. This requirement remains in place in 2024, with no changes in the definition or responsibilities for marketplace facilitators.

Remote Sellers

The nexus requirement for remote sellers in 2023 was identical to the standard threshold of $100,000 in sales or 200 transactions. In 2024, these conditions are still applicable without any modifications.

Included Sales

In 2023, gross sales included taxable sales of tangible personal property, admissions, and taxable services. In 2024, Vermont continues to include these items in determining nexus.

Registration

In 2023, sellers meeting the threshold were required to register for a Vermont sales tax permit. This process remains the same in 2024, with no changes to registration procedures.

Enforcement

The enforcement of sales tax compliance in 2023 involved penalties and interest for non-compliance. In 2024, Vermont maintains the same enforcement measures without changes to penalty structures or interest rates.

Exclusions

In 2023, certain exemptions were in place, such as sales for resale and non-taxable services. These exclusions continue to be applicable in 2024 with no changes.

Trade shows

In Vermont in 2024, participating in retail tradeshows involves specific sales tax obligations.

• Vendor Registration: Any vendor selling tangible personal property at a tradeshow must register with the Vermont Department of Taxes.
• Permit Requirement: Vendors must obtain a vendor's permit and display it at their booth during the tradeshow.
• Sales Tax Collection: Vendors are required to collect a 6% sales tax on all taxable sales made during the tradeshow.
• Filing Returns: Vendors must file sales tax returns and remit collected taxes to the Vermont Department of Taxes, adhering to filing schedules.
• Exemptions: Some items may be exempt from sales tax; vendors should verify exempt status according to Vermont tax code.
• Record-Keeping: Accurate records of all sales transactions and collected taxes must be maintained for a minimum of three years.
• Compliance: Non-compliance with Vermont sales tax obligations can result in penalties, including fines and potential suspension of selling privileges.
• Remote Sellers: Out-of-state vendors without a physical presence in Vermont must still collect and remit sales tax if their sales exceed economic nexus thresholds.

Fulfillment by Amazon and nexus

Fulfillment By Amazon (FBA) is a service where sellers store their products in Amazon's fulfillment centers. Amazon takes responsibility for storage, packaging, shipping, customer service, and returns.

2024 Vermont Sales Tax Obligations for FBA Sellers

• Marketplace Facilitator Laws require Amazon to collect and remit sales tax on behalf of sellers.
• Sellers must ensure they list their products as taxable unless specifically exempt.
• Economic Nexus Threshold defines that businesses with either 200 transactions or $100,000 in sales in Vermont must collect and remit sales tax.
• Remote Sellers must register with the Vermont Department of Taxes if they exceed nexus thresholds.
• Sales Tax Rate is the standard state sales tax rate of 6%, with no additional local sales taxes.
• Compliance requires sellers to maintain accurate records of transactions and remittances for auditing purposes.

Permits, certificates and sales tax registration in Vermont

To register for sales tax in Vermont in 2024, you need to obtain a Vermont Business Tax Account.

Start by completing the online application through the Vermont Department of Taxes website. You'll need your business information, including your federal EIN, business type, and NAICS code.

Once registered, you'll receive a Vermont Business Tax Account Number, which you'll use to file and remit sales tax as required by state law.

Registering for sales tax collection in Vermont

To register for sales tax collection in Vermont in 2024, you'll need to follow these steps:

Determine If You Need to Register

First, confirm that your business is required to collect sales tax in Vermont. Generally, if you have a substantial presence (nexus) in the state, such as a storefront, warehouse, or significant sales volume to Vermont residents, you'll need to register.

Prepare Necessary Information

Gather all required information about your business, including:

• Legal business name and any trade names
• Business structure (e.g., sole proprietorship, partnership, corporation)
• Federal Employer Identification Number (FEIN)
• Business address and contact details
• Social Security Number (for sole proprietors)
• Names and Social Security Numbers of business owners or officers

Create an Account

You will need to create an account on Vermont's online tax system. Typically, states offer an online portal for tax registrations and filings. You'll likely need to provide your email and set up a password to access the system.

Complete the Registration Form

Fill out the Vermont Department of Taxes’ Business Tax Account Application. You'll need to provide the information you gathered earlier and specify that you are registering for sales tax collection.

Submit the Application

Once the application form is complete, you will submit it through the online tax portal using your VT sales tax login. In some cases, you might have the option to mail it in, but online submission is usually quicker and more efficient.

Receive Your Permit

After processing your application, the Vermont Department of Taxes will issue you a sales tax permit. This permit allows you to legally collect sales tax in Vermont.

Begin Collecting Sales Tax

Once you have your permit, you can start collecting sales tax from your customers on applicable sales. Ensure you understand the sales tax rates and any exemptions that may apply.

File and Pay Sales Taxes

Stay on top of your sales tax responsibilities by filing and paying sales taxes on time. Vermont typically requires regular filing and payment deadlines which could be monthly, quarterly, or annually, depending on your sales volume.

Keep Records

Maintain detailed records of all sales and taxes collected, as this will be important for filing returns and in case of an audit.

Cost of registering for sales tax in Vermont in 2024

As of 2024, registering for a sales tax permit in Vermont does not require a fee.

The Vermont Department of Taxes allows businesses to register for a sales tax permit online through the myVTax portal without any charge.

Federal tax ID requirements for registering

If you are registering for sales tax in Vermont, you will generally need an Employer Identification Number (EIN). The EIN is used by the IRS to identify your business for tax purposes. Even if you do not have employees, many states require an EIN for sales tax registration.

To obtain an EIN, you can apply directly with the Internal Revenue Service (IRS). The application process can be completed online, by mail, or by fax.

Here is the link to apply for an EIN online: Apply for an EIN via IRS

After obtaining your EIN, you can proceed to register for sales tax in Vermont through the Vermont Department of Taxes. You can register online through their VTBizFile portal.

Here is the link to register for sales tax in Vermont: Register for Sales Tax in Vermont

Streamlined sales tax program and Vermont

As of January 2022, Vermont is a member of the Streamlined Sales and Use Tax Agreement (SSUTA).

This program is a collaborative effort among states to simplify and modernize sales and use tax administration in order to substantially reduce the burden of tax compliance.

Acquiring a business and registering for sales tax in Vermont

To register for sales tax in Vermont when acquiring a business, you'll need to follow these steps:

Obtain a Vermont Business Tax Account

This involves registering for a business tax account with the Vermont Department of Taxes. You'll generally need to complete the Business Tax Account Registration form, providing information like your business name, address, and federal Employer Identification Number (EIN).

Apply for a Sales and Use Tax Permit

As part of the registration process, you will apply for a Sales and Use Tax Permit. This permit allows you to collect sales tax on taxable goods and services sold in Vermont.

Provide Details of the Acquisition

You may need to provide information about the acquisition, including the name of the business being acquired, the previous owner's details, and the effective date of the acquisition.

Update Business Information

If the business being acquired already has a Vermont Sales Tax Permit, you may need to update the existing registration to reflect the new ownership.

Federal Employer Identification Number (EIN)

Ensure you have an EIN from the IRS as this is typically required when registering for state tax permits.

Comply with Additional Requirements

Comply with any additional state-specific requirements, such as providing a list of locations where business will be conducted or additional licensure if operating in specific sectors.

Register Online or By Mail

The Vermont Department of Taxes typically allows for business tax account registration and sales tax permits to be obtained online or through mailed forms.

Other Vermont registrations to consider

In Vermont, aside from sales tax registration, there are several other possible registrations and permits you may need to consider depending on your business activities:

Business Registration

You may need to register your business with the Vermont Secretary of State. This is typically required for corporations, limited liability companies (LLCs), partnerships, and sole proprietorships using a trade name.

Federal Employer Identification Number (EIN)

If you have employees or operate as a corporation or partnership, you'll need an EIN from the IRS.

Vermont Business Tax Account

Register with the Vermont Department of Taxes if you will be collecting sales tax, withholding income tax from employees, or if your business activities subject you to other state taxes.

Withholding Tax Registration

If you have employees, you need to register for Vermont withholding tax.

Unemployment Insurance

If you have employees, you may also need to register for unemployment insurance with the Vermont Department of Labor.

Local Permits and Licenses

Depending on the city or town where your business is located, you might need local business licenses or permits (e.g., zoning permits, health permits).

Occupational Licenses

Certain professions may require state-specific occupational licenses (e.g., electricians, physicians, barbers).

Environmental Permits

If your business activities affect the environment (e.g., emissions, waste disposal), you might need appropriate environmental permits.

Alcohol and Tobacco Licenses

If you sell alcohol or tobacco products, specific licenses are required.

Requirements for online sellers in Vermont

As of 2024, online sellers who engage in business within Vermont are required to comply with specific sales tax collection requirements. Here are the key points:

Economic Nexus

Online sellers must collect and remit sales tax if they meet Vermont's economic nexus thresholds. This generally applies if the seller has made sales exceeding $100,000 or 200 or more separate transactions into Vermont in the previous or current calendar year.

Marketplace Facilitators

If you sell through a marketplace facilitator like Amazon or eBay, the facilitator is generally responsible for collecting and remitting sales tax on your behalf.

Registration

Sellers meeting the economic nexus criteria are required to register with the Vermont Department of Taxes to obtain a sales tax permit.

Collecting Sales Tax

Once registered, sellers must collect sales tax at the point of sale for goods delivered to Vermont addresses. The current state sales tax rate is 6%, with certain localities potentially imposing additional local option taxes.

Filing and Remittance

Sellers must file regular sales tax returns (monthly, quarterly, or annually, depending on the volume of sales) and remit the collected taxes to the Vermont Department of Taxes. Filing can be done through the state's online portal.

Record Keeping

It's essential for sellers to maintain accurate records of all transactions, including sales, taxes collected, and any exemptions claimed, for audit purposes.

Collecting sales tax in Vermont

In 2024, Vermont businesses must navigate updated regulations for collecting state sales tax. This ensures compliance with state laws, aids public services, and supports the economy. Understanding these requirements is crucial for accurate tax collection and reporting, helping to avoid penalties and maintain smooth operations.

Understanding origin vs. destination sales tax collection

Vermont is a destination-based sales tax state, which means that sales tax is collected based on the location of the buyer. As such, sellers are required to collect sales tax at the rate imposed in the jurisdiction where the buyer receives the product or service.

For more detailed information, you can refer to the Vermont Department of Taxes: https://tax.vermont.gov/business-and-corp/sales-and-use-tax

Taxable products in Vermont

It's important to note that Vermont has specific exemptions for certain products and services. For example, most grocery items that are unprepared or unprocessed are exempt from sales tax. Similarly, prescription medications and most medical supplies and equipment are typically exempt as well.

Tangible Personal Property

Almost all physical goods fall into this category unless specifically exempt. This includes items like:

• Electronics
• Furniture
• Household appliances
• Clothing

Prepared Foods and Meals

Sales tax is imposed on prepared food items, such as:

• Meals purchased from restaurants
• Takeout orders
• Ready-to-eat food from grocery stores (e.g., deli sandwiches)

Utilities and Fuels

• Electricity
• Natural gas
• Propane (for non-residential use)

Software and Digital Goods

This encompasses downloaded software and digital products, such as:

• E-books
• Digital music
• Software licenses

Rental and Leasing of Tangible Personal Property

If you rent or lease physical goods, sales tax is generally applicable. This includes:

• Car rentals
• Equipment leasing

Telecommunications Services

Sales taxes are applied to telecommunications services, including:

• Cellular phone services
• Landline telephone services
• Internet services (depending on certain conditions)

Amusement and Recreational Services

Tax is also applied to admissions and services for entertainment and recreational activities, such as:

• Movie tickets
• Amusement park entry fees
• Fitness club memberships

Non-taxable products in Vermont

Groceries and Food Items

Most food items intended for human consumption are exempt, with exceptions like candy, soft drinks, and dietary supplements.

Clothing and Footwear

Clothing and footwear are generally tax-exempt, though specific luxury items or those priced over a certain amount may be taxable.

Prescription Medications and Medical Supplies

Prescription drugs and certain medical equipment and supplies are exempt.

Agricultural Supplies

Items used directly in agricultural production, such as seeds, fertilizers, and pesticides, may be exempt.

Manufacturing Equipment

\Machinery and equipment used in manufacturing might be exempt, particularly if they meet certain criteria regarding their use in the production process.

Is SaaS taxable in Vermont?

In Vermont, Software as a Service (SaaS) is subject to sales tax as of 2024.

This means businesses providing SaaS must charge and remit sales tax on their services to customers. Vermont considers SaaS a taxable service, aligning with the treatment of other digital goods and services in the state.

Are digital products taxable in Vermont?

In Vermont, digital products such as software, e-books, and music downloads are generally subject to sales tax in 2024. This includes any electronically delivered or transferred products.

However, certain exceptions and nuances may apply based on specific regulations and product types. Always refer to state guidelines for detailed information.

Are services taxable in Vermont?

In Vermont, as of 2024, many services are subject to sales tax, similar to tangible goods.

This includes services like telecommunications, admissions to entertainment events, some repair services, and personal services.

However, certain professional services, such as legal and medical, may remain exempt from sales tax. Always verify specific service categories for the most accurate tax information.

Sales tax exemption certificates

In Vermont, a sales tax exemption certificate allows businesses to purchase goods and services without paying sales tax, provided these items are for resale, production, or other qualifying purposes.

To obtain this exemption, a business must complete the Vermont Form S-3, Sales Tax Exemption Certificate, and present it to the seller. The seller must keep the certificate on file to validate the tax-exempt status of the transaction.

Businesses must ensure they meet the specific exemption criteria set by Vermont tax laws, as misuse of these certificates can result in penalties.

State tax holidays in Vermont for 2024

Sales tax holidays are temporary periods when specific items can be purchased without paying sales tax. Vermont does not have any scheduled sales tax holidays for 2024.

Filing sales tax returns in Vermont

Register for a Sales Tax Permit

Obtain your Vermont Sales and Use Tax license through the Vermont Department of Taxes (VDT).

Determine Taxable Sales

Identify which of your goods and services are subject to Vermont's sales tax.

Collect Sales Tax

Calculate tax using the state rate of 6% plus any applicable local sales taxes.

File Sales Tax Returns

File returns electronically via the myVTax online system.

Payment Deadlines

Sales tax returns and payments are due on the 25th day of each month for the previous month's sales.

Electronic Payment

Payments must be made electronically through the myVTax portal or via ACH Credit.

Use Tax

If you purchase taxable items for use in your business without paying sales tax, you must pay use tax.

Record Keeping

Maintain records of all sales and purchases for at least three years.

Sales tax filing frequency

In 2024, businesses operating in Vermont must adhere to the state's sales tax filing requirements, which are determined by the sales activity and revenue generated. The frequency of filing sales taxes in Vermont is categorized primarily into three schedules: monthly, quarterly, and annual.

Monthly Filing: Businesses collecting more than $500 in sales tax per month must file and remit their sales tax returns monthly. These filings are due by the 25th day of the following month. For example, sales taxes collected in January must be reported and paid by February 25th.

Quarterly Filing: Businesses with less sales tax liability, specifically those that collect between $100 and $500 per month, are typically required to file their returns quarterly. The due dates are usually the 25th of April, July, October, and January. This means that sales taxes collected in the first quarter (January to March) are due by April 25th.

Annual Filing: Businesses with minimal sales activity, meaning those that collect less than $100 in sales tax per month, may be eligible to file annually. Annual filings are due on January 25th of the following year. For instance, for the 2024 tax year, the sales tax return would be due by January 25, 2025.

Additionally, all businesses must ensure they are registered for a Vermont Sales and Use Tax account, which facilitates proper reporting and payment. Vermont also provides an electronic filing system to streamline the process.

Filing when no sales tax has been collected

When a business in Vermont is registered for sales tax but fails to collect it, they remain liable for the tax. The Vermont Department of Taxes may impose penalties, interest, and fines on the business for non-compliance. The uncollected sales tax must still be remitted, leading to potential financial strain on the business.

Additionally, regular audits may be conducted, and the business could face legal actions if discrepancies are found. Compliance with sales tax regulations is crucial to avoid these repercussions and ensure smooth business operations in Vermont.

Penalties for late filing and non-payment of sales taxes

In Vermont, timely filing and payment of sales taxes are crucial for businesses to avoid penalties and maintain compliance with state tax laws. For the year 2024, any late filing of sales tax returns can result in significant penalties for businesses. The state imposes a fine that can be a flat fee or a percentage of the tax due, depending on the degree of lateness. It's essential for businesses to file their returns by the due date to avoid these additional financial burdens.

Non-payment or underpayment of sales taxes in Vermont is taken very seriously and can lead to even more severe consequences. Besides being liable for the unpaid taxes, businesses may incur additional penalties and accrued interest on the overdue amount. Persistent failures to remit sales taxes can result in further enforcement actions, such as liens, levies, or even suspension of business licenses.

Sales tax discounts and incentives

In 2024, Vermont continues to offer a range of sales tax incentives and discounts to support businesses operating within the state.

Manufacturing Exemption

Businesses involved in manufacturing can benefit from a sales tax exemption on machinery and equipment used directly in production. This helps reduce the cost burden for manufacturing firms investing in essential operational tools.

Research and Development (R&D) Exemption

Companies engaged in research and development activities can avail themselves of a sales tax exemption on equipment and materials used directly in their R&D processes. This promotes innovation and investment in new technologies.

Energy Efficiency Programs

Vermont supports businesses engaged in improving energy efficiency through specific tax incentives. Purchases of energy-efficient equipment and systems may qualify for sales tax exemptions or reductions, encouraging sustainable practices among businesses.

Data Centers and High-Tech Businesses

High-tech businesses, especially those operating data centers, may benefit from sales tax exemptions on qualifying computer equipment and software. This initiative aims to attract and retain technology-focused enterprises in Vermont.

Agricultural Exemption

Agricultural businesses can take advantage of sales tax exemptions on equipment and supplies used directly in farming activities. This provision helps support the state's agricultural sector by reducing operational costs for farmers.

2024 sales tax filing due dates for Vermont

Monthly: 20th of the following month

Quarterly: 20th after quarter end

Annually: January 20, 2025

Shipping and sales tax in Vermont

When to pay tax on shipping in Vermont

In Vermont, the general rule for sales tax on shipping charges is as follows:

If the shipping and handling charges are separately stated on the invoice, they are not subject to Vermont sales tax. This means that if a business itemizes the shipping cost separately from the cost of the goods being sold, the shipping charges themselves are not taxable.

If the shipping and handling charges are not separately stated, meaning they are included in the total price of the goods, then the entire amount (including shipping) is subject to sales tax.