Vermont Tax Guide for Restaurants and Foodservice Businesses: What You Need to Know

Running a restaurant, food truck, or catering business in Vermont means juggling a lot more than just great food and happy customers — taxes are an essential part of staying compliant and protecting your business. The Vermont Department of Taxes recently updated its Tax Guide for Restaurants and Foodservice Businesses (June 2025), and here are the most important things you should know.

What Counts as a Taxable Meal?

If you sell food or beverages for immediate consumption — whether eaten on-site, taken to-go, or delivered — it’s generally taxable. This includes:

  • Hot or prepared foods
  • Sandwiches (except frozen)
  • Party platters
  • Salad bar items
  • Bakery items sold individually

Even if you’re not technically a restaurant (say, a convenience store or food truck), these items are still subject to Vermont’s Meals Tax.

What’s Not Taxable?

Some grocery-style items are exempt, even when sold by a restaurant, such as:

  • Whole pies or cakes
  • Loaves of bread
  • Uncooked pizzas
  • Quarts of milk or cider
  • Maple syrup
  • The “three donut rule” — three or more of the same bakery item sold together

Meals and Rooms Tax Basics

Vermont’s Meals and Rooms Tax is a gross receipts tax, meaning it applies to the total sales price (including delivery fees, credit card surcharges, or set-up charges). Current rates are:

  • 9% on meals
  • 9% on lodging
  • 10% on alcoholic beverages

Some towns also impose a 1% Local Option Tax (LOT) on meals, alcohol, or sales — check the LOT Finder to see if this applies to your location.

Alcohol Sales and Bundling Rules

Alcohol sold for immediate consumption is taxed at 10%. If you’re selling sealed containers (like a six-pack to-go), that’s subject to Vermont’s 6% Sales Tax instead.

⚠️ Bundling rule: If you sell alcohol together with another item and don’t itemize the receipt, the highest tax rate applies to the entire sale. For example, a beer + souvenir mug bundle without itemized pricing would be taxed entirely at 10%.

Tips, Service Charges, and Fees

This is where things often get confusing:

  • Tips left voluntarily by customers are not part of the Meals Tax base, but they must be reported as income by employees.
  • Service charges (such as mandatory gratuities for large parties) are treated differently:
    • If fully distributed to service staff and under 20%, they’re not taxable.
    • If above 20% or retained by the business, they are taxable under Meals and Rooms Tax.
  • Fees like “takeout charges” or “kitchen fees” are also taxable.

Other Things to Watch For

  • Delivery charges are part of the taxable meal price unless itemized separately.
  • Meal delivery platforms (DoorDash, Uber Eats, etc.) are responsible for collecting and remitting Meals and Alcohol Tax, but restaurants should keep valid resale exemption certificates on file.
  • Gift certificates aren’t taxable when sold — the tax applies when the certificate is redeemed.
  • Nonprofits generally must collect tax on meal and alcohol sales unless specifically exempt.

Filing and Compliance

All restaurants must register for a Vermont Business Tax Account and display their license. Taxes can be filed through myVTax, Vermont’s secure online filing system. If your sales exceed certain thresholds or you operate in multiple locations, electronic filing is required.

Bottom Line

Vermont’s restaurant tax rules are detailed, but with the right systems in place, you can stay compliant and avoid costly mistakes. Whether you’re a food truck owner, caterer, or fine dining establishment, understanding what’s taxable (and what isn’t) is essential to running a successful business.

👉 For the full official resource, check out the Vermont Department of Taxes guide

Recipients should not act on the information presented without seeking prior professional advice. Additional guidance may be obtained by contacting Davis & Hodgdon at 802-878-1963 (Williston) or 802-775-7132 (Rutland).

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