Sales tax on invoices in Vermont

Vermont sales tax for contractors: tax paid on materials, no itemized tax on invoices, the SUT-459 retailer election, exempt projects, local option tax.

Statewide rate

6%

Cities and counties may add their own.

SourceLook up your full rate

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When Vermont contractors incorporate tangible personal property into buildings, structures or landscapes, they pay sales tax on it when they buy it and charge their customers none, and the Vermont Department of Taxes says they can’t itemize sales tax on their invoices.

Vermont sales tax and your license

A business selling tangible personal property that’s taxable in Vermont charges, collects and remits sales tax to the Vermont Department of Taxes. Before you collect, register for a Vermont Business Tax Account and a license; both are free, each location needs its own license, and you display it where customers can easily see it.

Contractors: tax on materials, none on the customer

  • Materials: pay sales tax on the property you incorporate into real property when you buy it, and don’t charge your customer sales tax. The cost of your service isn’t subject to sales tax.
  • Untaxed purchases: if you didn’t pay Vermont sales tax on the property, pay use tax directly to the state on Form SUT-451.
  • What counts: the Department’s examples of real property improvements are electrical, plumbing, heating, ventilation and cooling systems, carpentry, roofing, plastering, foundations, landscaping and painting, plus improvements and repairs to septic systems, parking lots and driveways. Its Sales Tax Reference for Contractors adds furnaces, built-in appliances, wiring and fences as incorporated, and treats new construction as incorporated too.
  • Tools and equipment: equipment you buy, rent or lease and use in Vermont is always subject to Vermont sales tax, even on exempt projects, and tools, tarps and protective gear you use on a project are taxed to you.
  • Tax-exempt purchases: only items you’ll sell to your customer and charge sales tax on may be bought tax-exempt with Form S-3.

Retailers who occasionally install: the SUT-459 election

If you’re primarily a retailer or manufacturer, meaning more than 50% of your business, you’re treated as a contractor when you buy materials to improve, alter or repair real property. But if you only occasionally act as a contractor, installing property you sell, you can elect to be treated as a retailer on Form SUT-459, filed at least 30 days before you change your tax collection practices. You then pay no sales tax to the wholesaler and no use tax, and instead charge and collect sales tax from your end customer. The election binds you for five years.

Exempt buildings

No sales tax is due on building materials and supplies for the construction, reconstruction, alteration, remodeling or repair of a building or structure:

  • owned by or held in trust for the State of Vermont or the United States, or their agencies, and used exclusively for public purposes;
  • owned by or held in trust for a 501(c)(3) organization and used exclusively for its exempt purpose; or
  • owned by a local development corporation and used exclusively for its authorized purposes.

Complete Form S-3C, Certificate of Exemption. The exemption doesn’t apply to property those organizations lease but don’t own or hold in trust.

Services: a short statutory list

Vermont’s sales tax statute, 32 V.S.A. §9771, taxes retail sales and a short list of services, including public utility services such as gas and electricity (not water or transportation); producing, fabricating, printing or imprinting tangible personal property for consumers who furnish the materials; admissions to places of entertainment; and telecommunications.

Itemized tax on the invoice: not for contractors

  • Contracting work: the Department says contractors can’t itemize the sales tax on their invoices, but an invoice may include the statement: “The contractor has paid all applicable Vermont taxes on materials used for this job.”
  • Taxable sales: when you do collect the tax, as a retailer or under the SUT-459 election, 32 V.S.A. §9778 requires it to be stated, charged and shown separately on the first sales slip, invoice, receipt or other statement you give the purchaser.
  • Advertising: you may not advertise that the tax isn’t part of the price, that you’ll pay it, that it won’t be separately charged and stated, or that it’ll be refunded. The Commissioner can waive the separate-charge requirement, on application, for a business where it would be impractical.

Local option tax: where the buyer takes possession

Some Vermont municipalities vote a 1% local option sales tax on top of the state rate on this page; the Department’s Local Option Tax Finder checks a specific address or town. Vermont sales tax is destination-based, applied where the buyer takes possession of the item or where it’s delivered. Local option tax doesn’t apply to use tax.

Jobs across the state line

  • Out-of-state contractors working in Vermont owe use tax the same way Vermont contractors do. Bringing property in for fewer than six months for a project, you may base the use tax on its fair rental value for the period of use in Vermont.
  • Vermont contractors working elsewhere pay sales tax when buying from Vermont vendors, even for use in another state. But no use tax is due on supplies and materials for a property in a state with no sales or use tax that are stored in Vermont for 180 days or fewer.
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