Use tax is a tax imposed by state taxing authorities on the purchase of goods outside the taxpayer’s state of residence when sales tax is not collected on the transaction. Use taxes are generally designed to discourage the purchase of goods that are not subject to sales tax.
In Vermont, use tax is applied to purchases made outside of the state when sales tax has not been paid. This tax is designed to level the playing field between in-state and out-of-state sellers, ensuring that Vermont businesses are not at a competitive disadvantage. The use tax rate in Vermont is the same as the state sales tax rate, which is currently 6%. If a Vermont resident buys goods out of state or online and does not pay Vermont sales tax, they are responsible for paying the use tax directly to the Vermont Department of Taxes. This includes purchases made while traveling, mail order purchases, and online transactions. Taxpayers can report and pay use tax annually when filing their Vermont income tax return, or they can do so more frequently if they prefer.