What do you need to know about the Vermont sales tax?

Summary 

What is the sales tax in Vermont? 

Sales tax in Vermont is a consumption tax imposed by the state on the sale of goods and services.  

Vermont’s primary purpose in imposing a sales tax is to generate revenue for state and local governments to fund public services and infrastructure. The current rate is 6%, and it applies to most retail sales, leases, and rentals of tangible personal property, as well as some services. 

The landscape of Vermont state sales tax becomes more complex due to additional local taxes imposed by certain cities and counties.  

This means that, depending on where you are in the Green Mountain State, the total sales tax rate you pay can be higher than the base state rate of 6%.  

For example, cities like Burlington and South Burlington add a local option tax, bringing their total Vermont sales tax rate to 7%. This layered approach allows local governments to generate additional revenue for their specific needs, but it also means that consumers and businesses need to be aware of the varying rates to comply with tax regulations correctly. 

How do you calculate the sales tax in Vermont by city? 

Knowing how to calculate sales tax in Vermont involves adding the state rate to any additional local city taxes.  

The table below illustrates the sales tax rates across Vermont’s cities, showing how the minimum combined rate can vary: 

How do you calculate the Vermont sales tax by county? 

Similar to cities, counties in Vermont can also impose additional taxes on top of the state rate. Here's a table showing sales tax rates by county: 

What services are subject to sales tax in Vermont? 

In Vermont, sales tax is generally not applied to services, although there are exceptions.  

Taxable services include admissions to entertainment events, fabrication services, services to tangible personal property, and if labor is expended in producing a new or different item.  

It's important to note that the tax rate for these services is the same as the general sales tax rate, which is 6%, plus any applicable local rates. This means that a service subject to sales tax in Burlington, for example, will be taxed at a combined rate of 7%. 

However, many services are not taxed in Vermont.  

Professional services, such as legal advice, accounting, and most healthcare services, are generally exempt. This exemption stems from the state's policy to avoid double taxation on services that may already be taxed at the business level or are deemed essential.  

What is exempt from sales tax in Vermont? 

Vermont sales tax exemption rules help reduce the tax burden on essential goods and services. These exemptions include: 

These exemptions are designed to support essential needs and lower-income households. 

Does the Vermont sales tax online differ from offline? 

Yes, there are differences between online and offline sales tax in Vermont.  

When shopping online, the same sales tax rates apply as if the purchase were made in a brick-and-mortar store. This means that if you buy a taxable item online and the retailer has a physical presence in Vermont, they are required to collect the state and any applicable local sales taxes at the point of sale. 

The retailer is responsible for collecting sales tax and remitting it to the state. Issues can arise with online purchases when retailers do not have a physical presence in Vermont. In such cases, consumers are required to report and pay use tax on these purchases, equivalent to the sales tax they would have paid offline.  

Does Vermont have a sales tax holiday? 

Currently, there is no Vermont sales tax holiday.  

A sales tax holiday is a temporary period when certain items can be purchased tax-free. These holidays are often used to stimulate spending and provide relief to consumers during back-to-school seasons or other significant times of the year. 

The absence of a Vermont sales tax holiday in Vermont means consumers must plan their purchases without expecting a tax-free period.  

Get expert financial advice 

Understanding sales tax in Vermont involves navigating various rates and rules.  

Whether you're a resident making everyday purchases or a business owner managing sales, understanding the specifics of city and county rates, taxable services, exemptions, and the nuances of online versus offline purchases can save you time and money.  

Take advantage of the available exemptions to reduce your tax burden and ensure you're compliant with both state and local tax requirements. 

Let Unbiased connect you with a financial advisor for expert financial advice on managing your Vermont sales tax obligations and optimizing your overall financial strategy.