Operating a business in Vermont requires a solid understanding of the state's tax framework. The base state sales tax rate is 6%, with local jurisdictions adding up to 1%. LLC formation costs $125 in 2026.
Economic Nexus in Vermont
Remote sellers must collect Vermont sales tax if they exceed $100,000 in annual sales or 200 transactions within the state. This threshold has been in effect since 2018-07-01. Marketplace facilitators like Amazon and Etsy are also required to collect and remit tax on behalf of third-party sellers. The Vermont Department of Taxes enforces these provisions and provides registration guidance at https://tax.vermont.gov.
LLC Formation in Vermont (2026)
Forming an LLC in Vermont costs $125 for the initial filing. There is no annual franchise tax, keeping ongoing costs low. The annual report fee is $35. Vermont imposes a state income tax, which affects pass-through LLC taxation.
The process involves filing Articles of Organization with the Secretary of State, obtaining a federal EIN, and registering for applicable state tax accounts. You will also need a sales tax permit from the Vermont Department of Taxes.
Key Tax Rules
• Vermont has a 6% state sales tax rate.
• Local option taxes can add up to 1%.
• Clothing, groceries, and prescription drugs are exempt.
• Economic nexus: $100,000 in sales or 200 transactions.
Sales Tax Exemptions
The following categories are generally exempt from sales tax in Vermont: groceries, clothing, prescription drugs, medical devices. Businesses should maintain proper documentation for exempt transactions.