Vermont Sales Tax: What Is Taxable, Why Services and Contractor Labor Are Not, and Exemption Certificates (Form S-3)

Vermont's sales tax reaches far fewer transactions than most people expect. The state rate is 6%, but it applies to a short list of goods and a handful of specific services. If you run a handyman business, a lawn care company, a junk hauling service, or a contracting firm, you will usually not charge sales tax on your labor. Where owners get into trouble is with the tax on materials they buy, the items they sell or rent, and the paperwork that lets them buy tax-free for resale. This guide walks through each of those rules.

Vermont has no general state business license. You register your entity with the Secretary of State's Business Services Division, open a Department of Taxes account if you collect tax or withhold it, and then add whatever licenses your specific trade requires. The sales tax rules below apply once you are selling taxable goods, renting property, or providing a taxable service.

Informational content, not legal or tax advice. This article explains Vermont sales tax rules in general terms. Your results depend on your facts, and rules and rates can change. Before you act on this material, confirm it with the Department of Taxes and consult a qualified attorney or CPA, especially if you have several business activities or out-of-state sales.

The 6% Rate and How Use Tax Fills the Gap

Vermont's sales tax rate is 6%, set under 32 V.S.A. 9771. The companion use tax under 32 V.S.A. 9773 applies when you buy taxable property for use in Vermont and the seller did not charge Vermont tax, such as an out-of-state online purchase. You report use tax on Form SUT-451.

What Vermont Sales Tax Covers

The tax base is narrow. Vermont taxes the following:

• Tangible personal property, meaning physical goods sold at retail
• Prewritten computer software, which has been taxable however it is delivered since July 1, 2024, under Act 183 of 2024
• Specified digital products, including digital audio, audiovisual works, books and ringtones
• Public utility services, meaning gas and electricity (water is not included)
• Telecommunications and directory assistance
• Admissions to places of entertainment and amusement, such as athletic events, shows, golf courses and ski areas
• Producing, fabricating, printing or imprinting items for a customer who furnishes the materials
• Tangible personal property transferred to advertising agencies

Vermont Sales Tax on Services: Most Are Not Taxed

Most professional, repair and personal services are not subject to Vermont sales tax. When you sell only your labor, the following are not taxed:

• Handyman and home repair work
• Lawn care and snow plowing
• Junk removal and hauling
• Towing
• Cleaning services
• Courier and delivery labor

The labor exemption does not cover the items attached to the service. A repair shop that sells a replacement part has made a taxable sale of that part. Vermont also taxes rentals of tangible personal property. Canoes, bicycles, linens, tableware and other equipment rented to customers are taxable. Department of Taxes guidance treats charges to use gyms, pools, rinks, shooting ranges, golf courses and ski areas as taxable amusement charges, and campground day-use fees fall in the same category.

Photography Is the Main Professional Exception

Photographers owe tax when they sell photos. The sitting fee, consultation, labor, and prints or photos delivered on a device are taxable. Emailed or downloaded digital photos are not taxable, but digital video is.

Contractor Labor and Materials

Contractors are treated differently from service providers. Your labor on a construction, renovation or repair job is not taxable, but the materials you build into the property are. Contractors pay tax on those materials and do not charge it to the customer, so the tax becomes part of your cost. Keep these rules in mind:

• Do not add sales tax to a customer's invoice for your labor or for materials you install.
• An invoice may state that you have paid all applicable Vermont taxes on materials.
• Equipment and rentals are always taxable, even when you use them on a job.
• Contractors working on a qualified exempt project may use Form S-3C.
• A retailer or manufacturer that occasionally acts as a contractor may elect retailer treatment on Form SUT-459. That election is binding for five years, so read it carefully before filing.

Prepared Food and Lodging Are Not 6% Items

Prepared food and lodging follow a separate tax. Prepared food, coffee, bakery items eaten on the spot, and catering fall under the 9% meals and rooms tax, which is 10% on alcohol. Short-term rentals owe the 9% rooms tax plus a 3% surcharge. Do not apply the 6% rate to these sales.

Thirty-seven towns currently levy a 1% local option tax. Town lists change. Montgomery rescinded its tax effective October 1, 2025, so confirm your town's current status with the Department of Taxes before you set prices or file.

Cannabis retail carries the 6% sales tax plus a separate 14% cannabis excise tax under 32 V.S.A. 7902.

Exemptions Under 32 V.S.A. 9741

Certain sales are exempt from tax. The table below lists the common exemptions and the form or statute that applies. Confirm the documentation each exemption requires with the Department of Taxes.

Exempt item	Authority or form	Notes
Food and food ingredients for off-premises consumption	32 V.S.A. 9741(13)	Prepared food eaten on premises falls under the meals and rooms tax
Clothing	32 V.S.A. 9741(45)	Accessories, equipment and protective gear are not exempt
Prescription and medical items	32 V.S.A. 9741	Confirm specific items with the Department of Taxes
Agricultural inputs	Form S-3A	Buyer provides the form to the seller
Manufacturing inputs	Form S-3M	Buyer provides the form to the seller
Net-metering and solar	Form S-3E	Buyer provides the form to the seller
Fuel and electricity	Form S-3F	Buyer provides the form to the seller
Contractors on a qualified exempt project	Form S-3C	Contractor provides the form to the supplier

Soft drinks, meaning sweetened nonalcoholic beverages, remain taxable even when sold as groceries.

Form S-3 and Resale Certificates

The resale exemption works through Form S-3. The buyer gives the certificate to the seller, not the other way around. The Streamlined Sales and Use Tax Agreement certificate F0003 may be used instead. Keep these points in mind:

• The buyer signs. When you buy goods to resell, you give your supplier a completed Form S-3 or F0003.
• The buyer needs an account. The buyer must also hold a Vermont sales and use tax account.
• Your account number is not your certificate. Your sales and use tax account number identifies your account, but it does not replace a completed certificate.
• No certificate, presumed taxable. Without a certificate, the sale is presumed taxable under 32 V.S.A. 9745(a).
• Keep records. Sellers keep certificates for at least three years.
• Specialty forms. Dental (S-3T), vehicles (S-3V), forestry (S-3W) and meals for resale (M-3) each have their own form.

Forms are available from the Department of Taxes at tax.vermont.gov.

Common Mistakes to Avoid

• Charging 6% on handyman, lawn care, cleaning or junk removal invoices.
• Charging sales tax on contractor labor or on materials you install.
• Treating your sales tax account number as a resale certificate.
• Making a resale sale without a completed certificate, which leaves the sale presumed taxable.
• Forgetting use tax on taxable purchases from out-of-state sellers.
• Confusing the 6% sales tax with the 9% meals and rooms tax.

Next Steps

1. Register with the Department of Taxes at tax.vermont.gov/business/register if you will collect sales tax, meals and rooms tax, or withhold.
2. Sort your revenue into taxable goods, taxable services and nontaxable labor before you set prices.
3. Collect a completed Form S-3 from every resale customer and keep it for at least three years.
4. Confirm whether your town levies the local option tax and whether meals or lodging apply to your business.
5. Confirm specific items and exemption rules with the Department of Taxes at tax.vermont.gov.

For entity filings, see the Secretary of State's Business Services Division at sos.vermont.gov/business-services. The Vermont Small Business Development Center can help you organize your records. If your mix of goods, services and contracting makes the treatment unclear, have a CPA who works with Vermont businesses review your invoices before you file.