The Vermont sales and use tax is a 6% state tax on most retail sales of tangible personal property and certain services, matched by a 6% use tax on taxable items you bought without Vermont tax collected. The Vermont Department of Taxes administers both. Sellers collect at the register; when a seller doesn’t, the buyer owes the tax directly. Prepared meals and lodging follow a different rate, and some towns add 1% on top.
What’s Taxable and What’s Exempt
The tax reaches tangible personal property, defined as anything that can be seen, weighed, measured, or touched. That definition also covers electricity, water, gas, steam, and prewritten computer software regardless of delivery method. Telecommunications services and certain digital products are taxable as well.
Several everyday categories are exempt:
- Clothing, but not accessories, protective gear, or sports and recreational equipment.
- Grocery-store food and food ingredients sold for off-premises human consumption, except soft drinks.
- Prescription drugs, durable medical equipment, mobility devices, and prosthetics.
Meals, Lodging, and Short-Term Rentals
Restaurant meals, alcoholic beverages, and hotel or lodging rentals fall under Vermont’s separate meals and rooms tax at 9%, not the 6% sales tax. Municipalities with a local option tax add another 1%.
Short-term rental operators pay an additional 3% surcharge on top of the 9% rooms tax. Effective August 1, 2024, the surcharge applies to furnished dwellings rented to the traveling or vacationing public for fewer than 30 consecutive days and more than 14 days per calendar year. Traditional hotels and lodging establishments licensed by the Vermont Department of Health are not subject to the surcharge. In a municipality with a local option tax, a short-term rental can carry a combined rate of 13%: 9% rooms tax, 1% local option, and 3% surcharge.
Local Option 1% Add-On
Some municipalities add a 1% local option sales tax, bringing the combined rate to 7% within their borders. As of mid-2026, towns levying the local option sales tax include Bristol, Fair Haven, Mendon, Morristown, Pomfret, Swanton, Vergennes, and Waitsfield, with several taking effect in July 2026. The Department of Taxes maintains an interactive map and tax-finder tool for verifying whether a specific address is subject to the extra 1%.
When You Owe Use Tax
If you buy a taxable item and the seller doesn’t charge Vermont sales tax, you owe use tax at 6%. This comes up most often with online purchases, mail-order catalogs, phone orders, and shopping trips to New Hampshire or other lower-tax states. The same exemptions apply, so groceries and clothing remain exempt no matter where you bought them.
Individuals report personal use tax on the Vermont income tax return. Businesses registered for sales tax report use tax through their regular sales and use tax filings.
Registering as a Seller
A sales tax license is required if you have a physical presence in Vermont or meet the economic nexus threshold: at least $100,000 in sales or at least 200 individual sales transactions delivered into Vermont during the preceding 12-month period. Either trigger is enough on its own.
To register, complete Form BR-400, the Application for Business Tax Account, on the Department of Taxes website. The form asks for your Federal Employer Identification Number (or Social Security Number for sole proprietors), legal business name, physical and mailing addresses for each location, and the North American Industry Classification System code that matches your activity. Once processed, you’ll receive a license, which must be displayed where customers can see it.
Resale and Exemption Certificates
Businesses buying inventory for resale don’t pay sales tax at the point of purchase. The buyer gives the seller a completed Form S-3, Vermont’s exemption certificate. The same form covers purchases by qualifying nonprofit organizations, government entities, and volunteer fire departments or rescue squads.
A seller who accepts an S-3 in good faith avoids liability for uncollected tax. Good faith means verifying four things:
- The certificate contains nothing the seller knows to be false.
- It’s on the official Department of Taxes form or one with substantially identical language.
- It’s signed, dated, and fully completed.
- The property being purchased is the type ordinarily used for the stated exempt purpose.
The seller needs the completed certificate before or at the time of sale, with a 90-day grace period to obtain a fully executed form after the transaction. Sellers must keep certificates on file for at least three years from the date of the last sale covered. If a seller can’t produce a valid certificate during an audit, the Department seeks the uncollected tax from the seller. If the seller can prove the buyer’s exemption claim was fraudulent, the Department shifts collection to the buyer.
Filing Frequency and Due Dates
The Department assigns filing frequency based on your prior-year liability. If it exceeded $500, you file monthly. If it was $500 or less, you file quarterly. Annual filing is available for the lowest-volume sellers. New businesses are assigned a frequency at setup, and the Department may adjust it as your sales history develops.
Monthly returns are due by the 25th of the following month. Your June return, for example, is due July 25. Quarterly returns are due by the 25th of the month after each quarter ends. Annual returns are due January 25 of the following year. When a due date falls on a weekend or holiday, the deadline shifts to the next business day.
Paying Through myVTax
Filing and payment run through myVTax, the Department’s online portal. Select the tax period, enter your total taxable sales, and the system calculates what’s owed. ACH debit is free; credit cards carry a nonrefundable processing fee. Paper checks can be mailed with a payment voucher to the Department of Taxes in Montpelier. After submitting a return, the system generates a confirmation number. Keep it. If the Department flags something later, that number is your proof of timely filing.
To fix an error on a return you’ve already filed, log into myVTax and use the “Amending Returns” button. You can also submit a paper amendment by writing “Amended” at the top of the form.
Getting a Refund for Overpaid Tax
To recover sales, use, meals and rooms, or local option tax paid in error, file Form REF-620. Businesses use it when they collected and remitted tax they shouldn’t have, provided they’ve already refunded the customer. Individual buyers can file when a vendor charged tax incorrectly and won’t refund it directly.
Deadlines depend on the situation:
- Tax reported on a return: file within three years of the date the original return was due.
- Tax paid on a purchase: file within three years of the original purchase date.
- Bad debt on uncollectible accounts: vendors may claim a refund within two years of charging off the account.
Every REF-620 must include a written explanation of why the refund is warranted. If the claim involves tax that was collected and remitted, you’ll need proof the customer received a refund and you’ll need to amend the returns for the affected periods.
Penalties and Interest
Vermont’s sales tax penalties follow the general rules under 32 V.S.A. § 3202. Late filing is 5% of the unpaid tax per month or partial month, capped at 25%. If a return is more than 60 days late, the Department assesses a minimum $50 penalty even when no tax is owed. Late payment of non-income taxes also triggers 5% per month, again capped at 25%.
Interest accrues on top of penalties. For calendar year 2026, the rate on unpaid taxes is 7.75%, calculated from the average prime rate charged by banks during the preceding 12 months. Negligent underpayment draws a separate 25% penalty on the underpaid portion. Fraud carries a penalty equal to 100% of the unpaid tax. Filing on time even when you can’t pay in full avoids the late-filing penalty entirely.
Appealing an Assessment
If the Department issues an assessment you disagree with, you can request a formal hearing. The taxpayer carries the burden of proof, meaning you need to show a factual, mathematical, or legal error. A lawyer isn’t required, but you may bring a Vermont attorney or CPA.
The hearing is your primary chance to present facts. Any subsequent appeal to Vermont Superior Court or the Vermont Supreme Court reviews only the record established at the Department hearing, so evidence you don’t submit here can’t be added later. If the Commissioner’s final written determination goes against you, you have 30 days to appeal to Superior Court.