Is Grocery Taxable in Vermont?

Is Grocery Taxable in Vermont?

No, most groceries are exempt in Vermont. Food, food products, and beverages sold for home consumption are exempt from the 6% Sales and Use Tax under 32 V.S.A. § 9741(13), per the Vermont Department of Taxes exempt-items page (2026). The main carve-outs are soft drinks and sealed-container alcohol, taxed at 6% (7% with local option). Prepared food is taxed separately at 9% under the Meals and Rooms Tax.

Vermont’s rules sit across two taxes. This table is the whole page in miniature.

How Does Vermont Sales Tax Work?

Vermont charges a 6% Sales and Use Tax on tangible personal property, certain digital goods, and some services, set by 32 V.S.A. § 9771 (Vermont Legislature, 2026). Municipalities may add a 1% local option tax, bringing the combined rate to 7%. The Vermont Department of Taxes administers the tax, and sellers register through the myVTax portal.

Vermont has been a full member of the Streamlined Sales and Use Tax Agreement (SST) since January 1, 2007, per the Vermont Department of Taxes. That membership drives every classification on this page, because Vermont adopts SST’s uniform definitions of food, prepared food, candy, and soft drinks.

Remote sellers owe tax once they cross Vermont’s economic nexus threshold: $100,000 in sales or 200 individual transactions into Vermont in the preceding 12 months, effective July 1, 2018 after South Dakota v. Wayfair, per the Vermont Department of Taxes Wayfair FAQs (2026). All sales, taxable and exempt, count toward that threshold. For broader rate context, see Commenda’s Vermont sales tax rates page.

What Groceries Are Exempt From Sales Tax in Vermont?

Food and food products for home consumption are exempt statewide, including in local-option towns, under 32 V.S.A. § 9741(13). The exemption covers ordinary staples and even categories most states tax, like candy and dietary supplements.

Bottled water is exempt because it falls outside the SST soft drink definition. Bottled soda does not, which is why the next section taxes it. See Commenda’s Vermont sales tax exemption guide for the fuller exemption list.

Which Grocery Items Are Taxable in Vermont?

Vermont taxes two grocery-store categories at the 6% sales tax (7% with local option): soft drinks and alcohol sold in sealed retail containers. Candy and dietary supplements are not carve-outs in Vermont, which is unusual among SST states. Prepared food is taxed under a different tax, covered below.

A soft drink is a nonalcoholic beverage with natural or artificial sweeteners, excluding drinks containing milk or milk substitutes or more than 50% vegetable or fruit juice by volume, per the Vermont Department of Taxes. That definition is why bottled soda is taxable while milk and juice-heavy drinks are exempt. A sealed bottle of wine from a store is taxed at 6% sales tax, distinct from the 10% rate on alcohol served at a bar.

Is Candy Taxable in Vermont?

No, candy is exempt in Vermont when sold as a grocery item. Vermont’s food exemption under 32 V.S.A. § 9741(13) lists only soft drinks and sealed-container alcoholic beverages as taxable exceptions, and candy is not on that list, per the Vermont Department of Taxes exempt-items page (2026). This corrects a common assumption that Vermont taxes candy like most SST states.

The Vermont Legislature has tried to change this. Senate Bill S.54 (2021) proposed extending the sales tax to candy and was referred to the Senate Committee on Finance on January 29, 2021, but it did not advance, per the Vermont Legislature bill record. One exception exists: candy bought from a vending machine is taxed under the Meals and Rooms Tax, not left exempt.

Are Beverages Taxable in Vermont?

It depends on the beverage and where you buy it. Water, milk, and juice-heavy drinks are exempt groceries. Soft drinks are taxable at 6%. Drinks poured for immediate consumption fall under the 9% Meals and Rooms Tax, and alcohol splits between two rates.

A single alcohol sale is subject to either the 6% sales tax or the 10% alcohol tax, never both, per the Vermont Department of Taxes.

Is Prepared Food Taxable in Vermont?

Yes, prepared food, restaurant meals, takeout, and hot deli food are taxed at 9% under the Meals and Rooms Tax, not the 6% sales tax, per the Vermont Department of Taxes meals and rooms guidance (2026). In towns that adopt the 1% local option on meals, the combined rate is 10%. Alcohol served for immediate consumption is taxed at 10%, rising to 11% with the local option.

Vermont uses the SST three-prong prepared-food test. An item is prepared food if it is (1) sold heated, (2) sold with eating utensils provided by the seller, or (3) made from two or more ingredients mixed or combined by the seller for sale as a single item. A seller-heated rotisserie chicken is taxable. A cold packaged bakery loaf is exempt. A sandwich the seller builds from that loaf is taxable.

How Does Vermont’s Local Option Tax Work?

Municipalities may adopt a 1% local option tax that stacks on each state consumption tax. It takes the sales tax from 6% to 7%, the meals and rooms tax from 9% to 10%, and the alcohol tax from 10% to 11% in adopting towns, per the Vermont Department of Taxes local option tax page (2026).

More than three dozen Vermont municipalities have adopted the local option tax, generating over $50 million a year combined, per the Vermont League of Cities and Towns (2026). The Vermont Department of Taxes maintains the current list of adopting towns, so retailers configuring point-of-sale systems should check it rather than hard-code a town’s status. Grocery staples stay exempt everywhere, so the local option only raises the rate on items that were already taxable.

How Do Retailers Classify Taxable Grocery Items in Vermont?

Retailers apply SST definitions at the SKU (stock keeping unit) level. The three-prong prepared-food test plus the soft drink and alcohol definitions decide which tax applies at checkout. A point-of-sale (POS) system must map each item to exempt, the 6% or 7% sales tax, or the 9% or 10% meals tax, and it must drop tax on items paid for with SNAP benefits.

Businesses file and remit through the Vermont Department of Taxes myVTax portal. Misclassification cuts both ways: over-collecting tax on exempt staples erodes customer trust, and under-collecting on soft drinks or prepared food invites penalties, interest, and audits. For registration steps, see Commenda’s Vermont sales tax permit guide.

Are SNAP and WIC Purchases Taxed in Vermont?

No, items bought with SNAP (Supplemental Nutrition Assistance Program, branded 3SquaresVT in Vermont) or WIC (Special Supplemental Nutrition Program for Women, Infants, and Children) benefits are exempt from sales tax regardless of the item. Federal law bars states from taxing SNAP purchases, so even an otherwise-taxable soft drink bought with SNAP is not taxed.

The exemption has a scope the original post missed. SNAP eligibility is a separate federal question from Vermont tax status. Items SNAP cannot buy at all, like alcohol and hot prepared food, are not made purchasable or tax-free by this rule, per the USDA SNAP eligible food items page (2026). The exemption only covers SNAP-eligible items actually paid for with benefits.

How We Help With Vermont Grocery Tax

Vermont’s two-tax structure is exactly where sellers misclassify items and either over-collect or under-collect. Commenda’s indirect tax software tracks taxability rules, rates, and economic nexus exposure across states, so a seller shipping into Vermont applies the right treatment to soft drinks, prepared food, and sealed alcohol instead of guessing. It connects to 100+ ERP, API, and custom integrations, so the right rate maps to each SKU at the source.

For quick rate lookups, use the Commenda sales tax calculator. The calculator returns rates, not nexus exposure, so to see where you have crossed a collection threshold, check the US economic nexus guide.

Book a demo to see exactly which of your SKUs Vermont taxes, and at which of its two rates.