Vermont Meals and Rooms Tax: 9% Meals and Rooms, 10% Alcohol, 1% Local Option and the 3% Short-Term Rental Surcharge

If you sell prepared food, serve drinks for immediate consumption, or rent a room, cabin or home to overnight guests in Vermont, you probably owe the meals and rooms tax. New operators often assume it works like the 6% sales tax on goods. It does not. The meals and rooms tax has its own rates, its own license and its own return, and it covers a different set of sales. This guide covers the rates, who must register, what counts as a taxable meal, how the 1% local option works, and the 3% surcharge that applies to most short-term rentals.

Vermont's 6% sales tax reaches goods and a short list of items, and it reaches almost no services. Prepared food, coffee, bakery items eaten on the spot and catering fall under the separate 9% meals tax instead.

The rates at a glance

The rates are set by 32 V.S.A. 9241. Towns that have adopted the local option add 1 percentage point to each rate.

Taxable item	State rate	Rate in a local option town
Rent for each occupancy (rooms tax)	9%	10%
Each taxable meal (food and non-alcoholic beverages for immediate consumption)	9%	10%
Alcoholic beverages for immediate consumption	10%	11%
Short-term rental surcharge, added on top of the rooms tax	3%	3%, plus the 1% local tax

For a short-term rental, the total is 12% in a town without the local option and 13% in a local option town.

Do you need a license?

Vermont has no general statewide business license. You register your entity with the Secretary of State's Business Services Division, then open the tax accounts and add the licenses your activity requires. Start at the Vermont Secretary of State, Business Services Division. Filing Articles of Organization for an LLC costs $155.

If you collect meals or rooms tax, you need a Meals and Rooms Tax license from the Vermont Department of Taxes. The license is free. Vermont issues one license per location, and you must display it where customers can see it. If you also have employees, withholding requires a business tax account with the Department of Taxes. Apply through the Department of Taxes business registration page, and see the Department of Taxes home page for current forms.

What counts as a restaurant

Vermont's definition is broad. A restaurant is any establishment that charges for food or beverage intended for immediate consumption, or any business whose prior-year sales were at least 80% taxable food and beverage (32 V.S.A. 9202(10) and (15)). That definition covers the obvious places, plus caterers, food trucks and food carts that sell for immediate consumption. If you cater a wedding or run a lunch truck, you are a restaurant for tax purposes, and the 9% meals tax applies to your sales.

What is always taxable

Some items are taxable even when they come from a seller that is not a restaurant. These include heated food or beverage, non-frozen sandwiches, salad bar items, food sold from vending machines and party platters. A church, school booster club or nonprofit that sells these items can owe the tax unless a specific exemption applies.

What is not a taxable meal

Vermont exempts certain grocery-type takeout items from the meals tax. These are not taxable meals:

• Whole pies and cakes
• Loaves of bread
• Single bakery items of the same type when sold three or more at a time, known as the three-donut rule
• Whole uncooked pizzas
• Maple syrup
• Milk or cider in quart containers or larger
• Closed ice cream containers of a pint or larger
• Sauces and dressings of 8 ounces or larger

Some sales are exempt because of who makes them or who buys them:

• Meals served by qualifying religious or charitable nonprofits, including nonprofit bazaars or suppers, for up to four one-day events a year
• Meals served on school premises
• Hospital meals prepared by hospital employees
• Meals an operator furnishes to its own employees as pay
• Purchases made with SNAP benefits
• Meals bought for resale, which require Form M-3 from the buyer

The resale exemption for meals uses Form M-3. The sales tax resale exemption is a different form, Form S-3, given by the buyer. Neither works with your sales tax account number, so keep the signed form on file for every exempt sale.

Alcohol

Alcoholic beverages for immediate consumption are taxed at 10% statewide and 11% in a local option town. If you serve alcohol, you also need the right liquor license from the Department of Liquor and Lottery. Confirm the license requirements with that agency before you open, since they are separate from the tax.

The 1% local option

Around 50 towns have adopted a 1% local option tax on top of the state rates. Each town adopts its own mix of the local option sales, meals, alcohol and rooms taxes, so check which ones apply in your town. Check the Department of Taxes list of local option towns before you set prices, because whether your town is on it changes what you collect.

Two cities run their own systems. Burlington and Rutland City collect their own local meals, entertainment, lodging and alcohol taxes. Contact them directly:

• Burlington: 802-865-7000
• Rutland City: 802-773-1800

Other local option towns, including St. Albans City, remit their local tax to the Department of Taxes along with the state tax. Confirm the rate and filing method for your town with the local office or the Department of Taxes before you file your first return.

The vermont short term rental tax

If you rent a house, condo, apartment or room to the transient public, the vermont short term rental tax is the 9% rooms tax plus a 3% surcharge. Act 183 of 2024 created the surcharge for rents collected on or after August 1, 2024. You owe it on top of the 9% rooms tax and any 1% local tax.

The surcharge applies to a furnished dwelling rented to the transient public for fewer than 30 consecutive days and for more than 14 days a year. It does not apply to lodging licensed by the Health Department (18 V.S.A. chapter 85). A hotel, inn or lodge with a Health lodging license pays the rooms tax without the surcharge. A furnished home rented to guests on a short-term basis without that license is usually subject to it.

Platforms versus hosting directly

Who collects the tax depends on how the booking is made:

• Bookings through a platform such as Airbnb or Vrbo: The platform must register and collect all three components: the 9% rooms tax, the 3% surcharge and any 1% local tax.
• Hosts who rent only through platforms: You do not need to register. You still report the rental income on your Vermont personal income tax return.
• Independent bookings, such as a direct booking from your own website or a referral: You must collect the tax yourself, register for a Meals and Rooms Tax license and file returns.

Operators must post their meals and rooms account number on their advertisements (32 V.S.A. 9282). This applies to listings on any site or publication where you advertise your lodging, so check each listing you control.

Health Department lodging license

A Health Department lodging license is required when you operate three or more guest rooms or units. You may need one with fewer rooms if you prepare food on site. Confirm your situation with the Vermont Department of Health before you take bookings, since the lodging license is what determines whether the 3% surcharge applies to you.

Filing and due dates

The meals and rooms return is Form MRT-441. It is due on the 25th of the month, or the 23rd for February. If a due date falls on a weekend or holiday, it moves to the next business day.

Your filing frequency depends on your prior year's tax:

• If your liability for the prior calendar year was $500 or less, you file quarterly.
• If it was more than $500, you file monthly (32 V.S.A. 9243(a)).

E-filing is required in several situations. You must e-file if you have multiple locations, if your prior-year tax was over $100,000, or if you pay any local option tax or the short-term rental surcharge. Check your filing schedule and due dates on your Department of Taxes account after you register.

Common mistakes

• Charging 6% on prepared food. Prepared food, coffee, catering and bakery items eaten on the spot fall under the 9% meals tax, or 10% in a local option town.
• Skipping the local 1%. Many operators forget that their town has the local option until a return comes back wrong.
• Assuming platforms handle everything. A platform collects only on bookings it processes. Independent bookings remain your responsibility.
• Leaving the account number off ads. The account number must appear on advertisements.
• Treating every bakery item as taxable or exempt. The three-donut rule and the other grocery-type exemptions depend on the item and the quantity. Check unusual items before you price them.

Where to confirm details

Rates, forms and filing rules can change, so confirm current figures before you set prices or file:

• Vermont Department of Taxes: tax.vermont.gov
• Vermont Secretary of State, Business Services Division: sos.vermont.gov/business-services
• Vermont Department of Health, for lodging licenses
• Vermont Department of Liquor and Lottery, for alcohol licensing
• Your town or city clerk, for local rules and zoning
• The Vermont Small Business Development Center (VtSBDC) at vtsbdc.org, a useful starting point when you are not sure which agency handles your question

Towns, cities and villages control zoning and local licenses, and their rules differ widely. Check with your town before you list a rental or open a food business.

This guide is informational only. It is not legal, tax or accounting advice. Rules and rates can change, and the Department of Taxes and other agencies make the final determination on your obligations. For a complex setup, such as multiple locations, a mix of platform and direct bookings, or an entity structure, talk with a qualified CPA or attorney who works with Vermont hospitality businesses before you file.