Vermont Sales Tax Rates

Total Range for 2024

6%–7%

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Why do you need to collect sales tax in Vermont?

If you’re selling goods and services in Vermont then sales tax might apply! To determine your obligation, you need to understand “nexus,” which ties businesses to states for tax purposes.

Two types of nexus exist:

  1. Physical Nexus: Having a physical presence, like an office, warehouse, or employees in Vermont, triggers this type. If you do, you likely need to collect sales tax.
  2. Economic Nexus: This kicks in when your sales within Vermont exceed a certain economic threshold. Even without a physical presence, surpassing this threshold requires collecting sales tax.

In Vermont, there is also a transaction threshold of 200, which means that even if your sales aren’t over $100,000 if you’ve sold more than 200 items then you still need to pay sales tax.

Is what you’re selling taxable in Vermont?

Now that you understand the basics of Vermont’s sales tax and nexus thresholds, let’s delve into whether your specific products or services are taxable.

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How to register for sales tax in Vermont

Vermont offers two main ways to register for sales tax:

  • Online: This is the preferred method and strongly encouraged by the Vermont Department of Taxes. You can register through their online portal, myVTax: http://tax.vermont.gov/
  • Mail/Fax: You can also register by mail using form BR-400, downloadable from the Department of Taxes website. Faxing the form is another option, but less common.

How to collect sales tax in Vermont

  1. Calculate the Sales Tax
  2. Rounding Rules:
  • Vermont uses a specific rounding rule for sales tax calculations.
  • You must carry out the tax calculation to the third decimal place.
  • Then, round the tax amount to the nearest whole cent:
    • If the third decimal place is greater than four, round up to the next cent.
    • If the third decimal place is four or less, round down to the nearest cent.
  1. Collection Methods:
  • You can collect sales tax by including it in the total price displayed to your customer.
  • Most point-of-sale (POS) systems can automatically calculate and add the sales tax during checkout.
  1. Record Keeping:
  • It’s crucial to keep good records of your sales and the sales tax you collect.
  • These records will be necessary when you file your sales tax returns.
Example:

Let’s say you’re selling a book in Vermont for $20.00 (before tax).

  1. The base Vermont sales tax rate is 6%.
  2. Multiply the sales price by the tax rate: $20.00 x 0.06 = $1.20
  3. Since the third decimal place (0) is less than four, you would round down to the nearest cent.
  4. Therefore, the total sales tax you would collect on the $20.00 book is $1.20.
  5. The final price the customer pays would be $20.00 (price) + $1.20 (sales tax) = $21.20.

FAQs

Do you have a physical nexus in Vermont?

You have a physical nexus in Vermont if you have a physical presence that connects your business to the state in a way that requires you to collect and remit sales tax. Here are some factors that indicate physical nexus in Vermont:

  • Owning or leasing real property or personal property: This includes having a store, office, warehouse, or any other physical location in Vermont.
  • Having employees in Vermont: This could be full-time, part-time, or even temporary employees who regularly work within the state.
  • Storing inventory in Vermont: Even if you don’t have a physical store, storing products in a warehouse or fulfillment center located in Vermont creates a nexus.
  • Having regular sales representatives in Vermont: If you have salespeople who travel to Vermont to solicit sales or take orders, it might establish physical nexus.
Do you have an economic nexus in Vermont?

You have economic nexus in Vermont if your business makes more than $100,000 in sales within the state or completes more than 200 transactions into the state during any preceding twelve-month period.

What is use tax in Vermont?

In Vermont, use tax applies to purchases you make where you don’t pay sales tax at the time of purchase, but are still required to pay tax because you’ll be using the item in Vermont. The use tax rate is the same as the Vermont sales tax rate, which is currently 6%.

Do you need a seller/reseller permit?

In Vermont, you need a seller’s permit (also called a sales tax permit or a sales and use tax account) if you will be:

  • Collecting and remitting Vermont sales tax: This applies if you have a physical nexus or economic nexus in Vermont.
    • Physical Nexus: You have a physical presence in Vermont, like a store, office, warehouse, or employees working in the state.
    • Economic Nexus: You exceed the sales thresholds for out-of-state sellers, which is currently exceeding $100,000 in sales or 200 transactions to Vermont in a year.
  • Purchasing items tax-free for resale: A seller’s permit allows you to obtain a resale certificate, which you can present to wholesalers or other businesses to avoid paying sales tax on your inventory purchases.
How to get a sales tax permit/license in Vermont?

There are two main ways to register for a sales tax permit in Vermont:

  1. Online: This is the preferred method and highly encouraged by the Vermont Department of Taxes. You can register through their online portal, myVTax: http://tax.vermont.gov/
  2. Mail/Fax: You can also register by mail using form BR-400, downloadable from the Department of Taxes website. Faxing the form is another option, but less common.
When are Vermont's Returns Due?

The due date for Vermont’s sales tax returns depends on the filing frequency assigned to you by the Department of Taxes when you register for your sales tax permit. Here’s a breakdown:

  • Filing Frequency: The department determines your filing frequency based on your estimated annual sales tax liability.
  • Possible Frequencies: They typically assign either monthly, quarterly, or annually.
  • Due Dates:
    • Monthly Filers: You must pay sales tax for the month by the 25th day of the following month. (Exception: February is due on the 23rd)
    • Quarterly Filers: Due dates are the 25th day of April, July, October, and January, following the respective quarter ends (March 31, June 30, September 30, and December 31).
    • Annual Filers: The due date is typically the 25th day of April for the prior year’s sales tax.
How to file sales tax in Vermont

Determine Filing Method:

  • Online Filing: This is the preferred method and mandatory for:
    • Businesses with sales tax exceeding $100,000 annually
    • Businesses filing for multiple locations
    • Businesses collecting local option tax
  • Paper Filing: You can use form TR-100 for monthly or quarterly filing, or form TR-104 for annual filing. However, online filing is generally recommended for its speed and convenience.

Filing Your Return:

  1. Online Filing: Use the myVTax portal (http://tax.vermont.gov/) to file electronically. You’ll need to register for an account if you haven’t already.
  2. Paper Filing:

Payment Options:

  • Online: You can make payments electronically through myVTax when filing online.
  • Mail: Send a check or money order made payable to “Vermont Department of Taxes” to the address provided on the form (for paper filing).
Is anyone exempt from sales tax in Vermont?

Exempt Items:

  • Common Examples:
    • Groceries (excluding prepared food and soft drinks)
    • Prescription drugs and medical equipment
    • Clothing for children under 12 (with some exceptions)
    • Over-the-counter medications
    • Feminine hygiene products

Exempt Customers:

  • Common Examples:
    • Federal government
    • State of Vermont
    • Non-profit organizations qualifying for federal exempt status under 26 U.S.C. § 501(c)(3)
    • Agricultural organizations qualifying under 26 U.S.C. § 501(c)(5) (for certain purchases)
    • Merchants purchasing goods for resale (requires a resale certificate)

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