The Vermont sales tax is 6% on most retail goods and certain services, with about 38 municipalities adding a 1% local option tax for a combined 7% rate. Prepared meals and lodging are taxed at 9%, and alcohol poured for on-site consumption at 10%. Groceries, most clothing, and prescription drugs are exempt.
The Rates You’ll Actually Pay
The base rate set by statute is 6% on the retail sales price of taxable goods and services.1Vermont General Assembly. Vermont Code 32-9771 – Imposition of Sales Tax
Under 24 V.S.A. § 138, towns can hold a referendum to add a 1% local option tax.2Vermont General Assembly. Vermont Code 24-138 – Local Option Taxes As of 2026, roughly 38 municipalities collect that extra penny on retail sales, including Burlington, Montpelier, Rutland, Brattleboro, Stowe, and Middlebury, bringing the combined rate to 7%.3Vermont Department of Taxes. Local Option Tax A separate local 1% can apply to meals, rooms, and alcohol, and more than 40 towns have adopted some version of it. A few communities adopt only the local meals piece or only the local rooms piece, so the right question is which specific local tax your town passed, not whether it has “a local tax.”
Prepared meals and lodging carry a 9% meals and rooms tax instead of the 6% sales tax.4Vermont Department of Taxes. Meals and Rooms Tax Short-term vacation rentals (furnished homes or condos rented for fewer than 30 consecutive days and more than 14 days per year) pay an additional 3% surcharge on top of the 9%. Hotels and licensed lodging establishments are not subject to the surcharge.
Alcoholic beverages sold for immediate consumption at bars, restaurants, and catered events are taxed at 10%.5Vermont Department of Taxes. Alcoholic Beverage Tax A sealed six-pack from a grocery store, by contrast, is taxed at the general 6%. A single transaction never gets hit with both. Where a local option applies, add 1% to whichever rate is in play.
What’s Taxable and What Isn’t
Vermont taxes all tangible personal property sold at retail unless an exemption applies.6Vermont Department of Taxes. Sales and Use Tax The exemptions matter more than the list of taxable goods, because the biggest everyday purchases are exempt.
Groceries, With One Catch
Food and food ingredients sold for off-premises human consumption are exempt, and SNAP purchases are exempt as well.7Vermont General Assembly. Vermont Code 32-9741 – Sales Not Covered The exception is soft drinks, which stay taxable even at a grocery store. Vermont defines a soft drink as any nonalcoholic beverage with natural or artificial sweeteners, sweeping in soda, energy drinks, sports drinks, sweetened teas, and sweetened waters.8Vermont Department of Taxes. Soft Drinks Beverages that contain milk or milk substitutes, and juices that are more than 50% fruit or vegetable juice by volume, are not soft drinks and stay exempt.
Clothing and Footwear
Most clothing and footwear for everyday wear is exempt, with no price cap. A $10 shirt and a $500 coat are both tax-free.9Vermont Department of Taxes. What Is Taxable and Exempt Two categories remain taxable: protective equipment like hard hats, safety goggles, and welding masks, and sport-specific gear like cleated athletic shoes, ski boots, ice skates, wetsuits, and sport gloves.
Medical Items
Prescription and over-the-counter drugs for human use are exempt, as are durable medical equipment, mobility aids, and prosthetic devices. Insulin, blood products, and medical oxygen qualify when they are the type commonly used to treat, correct, or reduce the severity of human ailments. Supplies that are primarily preventive or hygienic do not qualify.10Legal Information Institute. Vermont Administrative Code – Sales and Use Tax
Digital Products and Software
Digital products delivered electronically to an end user (downloaded or streamed music, movies, e-books, and similar content) are taxed at 6%. Since July 2024, all prewritten computer software is taxable regardless of how it’s delivered: disc, download, or cloud-based subscription.11Vermont Department of Taxes. Prewritten Computer Software Custom software development and technical support services are not taxable. Most professional services (legal, accounting) are exempt, but telecommunications services are taxable.
Farm Supplies
Farm machinery and equipment are exempt when used at least 75% of the time to produce agricultural or horticultural commodities for sale. Fertilizers, pesticides, and similar supplies are exempt when they are both consumed or directly used in production and the type of item typically used for agriculture.12Vermont Department of Taxes. Agriculture Farmers claim the exemption at purchase using Form S-3A.
Use Tax on Out-of-State and Online Purchases
If you buy something taxable from an out-of-state or online seller that doesn’t collect Vermont tax, you owe a 6% use tax directly to the state.13Vermont Department of Taxes. Use Tax for Individuals If the seller charged another state’s sales tax at a lower rate, you owe Vermont the difference. If the other state’s rate was 6% or higher, you owe nothing more.
Individuals report use tax on Form IN-111 (the annual income tax return) or pay through myVTax. For purchases under $1,000 each, the Department publishes a lookup table based on adjusted gross income so you don’t have to track every small order. For any single purchase of $1,000 or more, calculate the exact 6% separately.
When Sellers Have to Collect
Any physical presence in Vermont (a warehouse, employees, or sales reps) triggers the obligation to collect sales tax from the first dollar. Out-of-state businesses without a physical footprint must register and collect once they cross either threshold in a 12-month period: $100,000 in gross sales into Vermont or 200 separate transactions. Sales made through marketplace platforms count toward those thresholds.
Marketplace facilitators like Amazon and Etsy have been required to collect and remit Vermont sales tax on behalf of their third-party sellers since June 2019. The facilitator has to tell its sellers it’s handling the tax; once that notice goes out, the individual seller is off the hook for those platform transactions.14Vermont Department of Taxes. Marketplace Facilitators If you also sell directly outside the platform, you need to assess nexus for those sales on their own.
Collecting businesses need a sales tax license from the Department of Taxes before the first taxable sale. The license is free and must be posted where customers can see it, and each Vermont location needs its own.15Vermont Department of Taxes. Sales and Use Tax – Getting Started Registration goes through the Vermont Business Tax Account system and asks for your EIN (or SSN for sole proprietors), the business’s legal name and address, and the start date for taxable sales. Nonprofits that make taxable sales still need to register.
Buying inventory for resale? Give the seller a completed Form S-3, Vermont’s resale exemption certificate, and the purchase is tax-free.16Vermont Department of Taxes. Form S-3 – Vermont Sales Tax Exemption Certificate for Purchases for Resale, by Exempt Organizations, and by Direct Pay Permit The same form covers exempt organizations and direct-pay permit holders. Vermont resale certificates do not expire.
Filing Frequency, Deadlines, and Penalties
Vermont assigns your filing frequency based on prior-year liability. If you owed more than $500 in sales and use tax last year, you file monthly. If you owed $500 or less, you file quarterly.17Vermont Department of Taxes. Sales and Use Tax – Frequently Asked Questions
Monthly returns are due by the 25th of the following month. The 2026 quarterly dates are:
- Q1 (January–March): April 27, 2026
- Q2 (April–June): July 27, 2026
- Q3 (July–September): October 26, 2026
- Q4 (October–December): January 25, 2027
A due date landing on a weekend or holiday pushes to the next business day.6Vermont Department of Taxes. Sales and Use Tax File through myVTax, which is required for any return that includes local option taxes.18Vermont Department of Taxes. File and Pay You still have to file for periods with zero sales. Skipping a zero return is a common mistake and it draws a penalty.
Late filing and late payment each carry a 5% penalty per month, capped at 25% of the unpaid tax. A return filed more than 60 days late draws a flat $50 penalty even when no tax is due.19Vermont Department of Taxes. Interest and Penalties Interest runs on top at a rate the Commissioner of Taxes sets annually. Fraudulent returns are penalized at 100% of the unpaid tax, and knowingly failing to file, collect, or remit the tax is a crime carrying up to a year in jail and a $1,000 fine.20Vermont General Assembly. Vermont Code 32-9814a – Criminal Penalties