A Local Option Tax (LOT) is a 1% tax collected to raise money for a municipality’s use. Municipalities can vote to add 1% LOT to the statewide tax rates for Meals and Alcohol, Rooms, and/or Sales tax. See our Local Options Tax page for an overview and list of towns with LOT.
The same rules that apply to Vermont taxes apply to LOT. Items exempt from Vermont Sales, Meals, Alcohol, or Rooms Tax are also exempt from LOT.
When to Collect Local Option Tax
LOT collection is based on where a buyer takes possession of a purchase or receives a service. Businesses must add the 1% LOT to taxable purchases made within or delivered to a LOT town. See Example Scenarios for more information.
- Businesses located within towns with LOT for sales, meals, rooms, and alcohol:
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All taxable sales, lodging/rentals, meals, and alcoholic beverages sold at your physical location: Collect LOT
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Deliveries to customers within your LOT town: Collect LOT
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Deliveries to customers within another LOT town: Collect LOT for the destination town’s LOT
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Deliveries to customers within a non-LOT town: Do not collect LOT
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- Businesses not located within LOT towns:
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Collect LOT if a taxable sale or meal is delivered to a customer within a LOT town.
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Use Geolocating Tools to Verify LOT Jurisdiction
Incorrectly collecting LOT could be costly to your business. LOT jurisdictions in Vermont fall along municipal boundaries, but USPS town names and ZIP codes do not necessarily do the same. Two Vermont municipalities may share a zip code and/or USPS Town name. For example, Marlboro and Wilmington are distinct municipalities with distinct LOTs but share the 05363 ZIP code and use “Wilmington” as their USPS town name. Use the Local Option Tax Finder Tool or other tools to verify addresses where towns share zip codes or USPS town names.
Tools to Help Determine Where Local Option Tax Applies
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Use the Department of Taxes’ Local Option Tax Finder Tool to check individual delivery addresses, including whether your business’s physical location is in a LOT town.
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Access Vermont’s address-based rate and boundary files from the Streamlined Sales Tax Governing Board for use in an automated system.
- Review Streamline's instructions for downloading, using, and identifying the correct files on the Rate and Boundary Files page of their website. Vermont's files begin with "VT".
- Depending on your needs, select "Rate Files" or "Boundary Files" in the Access to Files section on the right side of the page.
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If you use vendor software, double-check that your vendor is correctly geolocating customer addresses for deliveries.
Meals, Alcohol, & Rooms Tax + LOT
LOT must be charged if taxable meals or accommodation are provided within or delivered to a town with Local Option Meals, Alcohol, and Rooms tax. This includes catered meals.
Where it applies, the 1% LOT must be charged in addition to 9% meals and rooms tax and the 10% alcohol tax for taxable sales. Note that an alcohol sale in this context refers to alcoholic beverages served on premises for immediate consumption, as at a bar or restaurant.
Please see the Department of Taxes Restaurant Guide for more information on taxable meals and what items may be exempt from Vermont Meals and Rooms Tax.
On receipts, businesses may itemize the 1% LOT or include it in the total taxes.
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Meals or Rooms Tax, collect 9% Meals or Rooms Tax + 1% LOT.
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Alcohol, collect 10% Alcohol Tax + 1% LOT
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Delivery:
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Meals and Alcohol Tax + LOT applies to any taxable meal delivered to a LOT town.
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Meal delivery charges, packaging fees, and/or credit card fees should all be included in the price of a meal or alcoholic beverage, before taxes are calculated.
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For more information about meals and alcohol tax and LOT, see our Restaurant Guide.
Sales Tax + LOT
If a customer purchases and takes possession of a sales-tax eligible product within a LOT town, or gets their purchase delivered to an address within a LOT town, 1% LOT must be charged in addition to 6% Sales Tax.
Sales LOT applies to all products purchased in or delivered to a LOT town. Delivery fees, package charges, credit card fees, etc. are all considered part of the product and should be included before calculating sales tax and LOT.
Items delivered to a P.O. Box are subject to LOT based on the town the P.O. Box is in, not the home/business address of the recipient.
On customer receipts, businesses can itemize LOT or include LOT within the total taxes on their receipt.
Please note: LOT is not collected for motor vehicle sales and rentals because these are subject to motor vehicle purchase and use tax.
How to File and Pay Local Option Taxes Online
If your business collected LOT for any town, you must file and pay your business taxes online. You can do this for free through the Department of Taxes taxpayer portal, myVTax. Go to myVTax.vermont.gov, then select "File a Return."
After you've completed your business contact/identifying information and are ready to enter LOT, click "Please click here to add Local Option Taxes" link (circled). When you click on this, a window opens with the LOT towns listed. Enter the LOT you collected, by town. After you enter this, the Total Location Tax Due will update to include the LOT you entered. You then make the payments on the payment screen at the end of the submission.
For additional information, including a list of municipalities with local option tax, please visit our Local Options Tax Overview page or contact the Business Tax Section at 802-828-2551 or by email at tax.business@vermont.gov.
Example Scenarios for LOT Collection
Sales Tax + LOT
- A customer goes into a retail business in Williston (Williston has a LOT on sales), purchases a taxable item, and leaves the store with the item. The customer has taken possession of the item in Williston, so the LOT is due
- A customer in Newport (Newport does not have a LOT on sales) orders a taxable item from a retail business in Williston, and the retailer mails or delivers the item to the customer in Newport. The customer has not taken possession in Williston, so no LOT is due.
- A customer in Williston orders a taxable item from a retail business in Newport and the retailer mails or delivers the item to the customer in Williston. The customer has taken possession in Williston, so LOT is due
Meals and Rooms Tax + LOT
- A customer dining in a restaurant in Waterbury (Waterbury has a LOT on meals and alcoholic beverage sales) buys a meal and an alcoholic beverage. The meal and the alcoholic beverage purchases are subject to the 1% LOT
- A visitor staying at a hotel or bed and breakfast in Waterbury must pay a 1% LOT because Waterbury has a LOT on rooms.
- A business located within Waterbury that delivers a meal to a customer’s address in a town without a LOT should not collect Waterbury LOT on that meal. A business located outside Waterbury that delivers a taxable meal to a customer’s address within Waterbury must collect Waterbury LOT on that meal.
To read more about LOT in Vermont law, visit: 24 V.S.A. § 138.