Like other states, Vermont relies on various forms of taxes to provide services to its residents. Certain taxes, such as individual property taxes, are collected by the individual municipalities in the state and help fund not only municipal services but local school districts. Other taxes are levied and collected by the state of Vermont through various departments.
Sales and Use Tax
As of 2011, the sales and use tax in Vermont is 6 percent. Buyers purchasing "tangible personal property," amusement and fabrication services, and certain public utility services are subject to the sales tax. Among the exemptions to the sales tax are shoes, clothing, food, medical items, residential electricity and fuel, and manufacturing equipment and machinery. Buyers must pay the use tax if a seller does not collect tax on eligible items or an item "is purchased from a source where no tax is collected." Certain Vermont towns may collect local option sales taxes, an additional tax on sales.
Motor Vehicle Taxes
The Department of Motor Vehicles collects various taxes related to personal transportation. These include a 6 percent tax on the net price of motor vehicle sales and 9 percent taxes on rental car use. For diesel fuel, 25 cents is collected on each gallon with 1 cent designated for an oil clean-up fund and 3 cents dedicated to infrastructure assessment. For gasoline, a 19 cent state tax is collected on each gallon at sale along with a 2 percent tax on the retail price for infrastructure assessment.
Business and Corporation Taxes
Partnerships, S-corporations and limited liability companies in Vermont are subject to the Business Entity Income Tax. Such income earned in Vermont must be paid by the partner, member or shareholder. In 2011, this tax is generally $250. Additional state taxes may be charged at the corporate tax on certain types of income under Internal Revenue Service regulations.
Vermont's corporate income tax is based on income allocated to the state. For 2011, a minimum $250 tax applies to active corporations doing business in the state, with the exception of Small Farm Corporations. These entities pay a minimum of $75 in tax.
While Vermont has no inheritance tax, it does have an estate tax. This tax is connected with the federal estate tax and must be filed if a federal estate tax filing is required. If the deceased's estate earns a minimum of $600 in gross income in the tax year after death, the income must be reported to the Vermont Department of Taxes.