# Vermont Contractor Taxes and Licensing: What You Need to Know

Vermont contractors who build materials into real property pay the 6% sales tax when they buy them and should not charge sales tax to the customer; the department says the cost of service isn't taxable. Since April 1, 2023, contractors must register with the Office of Professional Regulation before taking homeowner jobs over $10,000.

## Key takeaways

- Pay 6% sales tax on materials when you buy them. You can't itemize sales tax on a real property invoice.
- Tools and equipment are always taxable in Vermont, even on exempt projects.
- Residential contractors must register with the Office of Professional Regulation before contracting with a homeowner for more than $10,000, labor and materials included.
- Electricians, plumbers, gas technicians and oil burner installers are licensed or certified by the Division of Fire Safety.
- Vermont's income tax runs from 3.35% to 8.75% (2025 schedules).

## What's unusual about Vermont for contractors?

Vermont is one of the few states that tells contractors outright what to write on the invoice. The Department of Taxes says you "cannot itemize the sales tax" on a real property job, but you may print this line: "The contractor has paid all applicable Vermont taxes on materials used for this job." That statement does real work. It tells the customer why there's no tax line and shows you paid at the supply house.

The second quirk is licensing. Vermont has no general contractor license. Instead, Act 182 of 2022 created a **residential contractor registration** run by the Office of Professional Regulation (OPR), required since April 1, 2023. OPR's FAQ notes the registry is about fraud, not workmanship, and it comes with contract rules that shape how you write bids.

## Is contractor labor taxable in Vermont?

No, when the work improves real property. The department says that when contractors build tangible personal property into buildings, structures and landscapes, they should not charge sales tax, should pay tax on the materials at purchase, and "the cost of service is not subject to sales tax." The sales tax rate is **6%**. Some towns add a **1% local option tax**, which businesses collect and remit to the department.

Vermont's list of real property improvements is broad. It names electrical, plumbing, HVAC, carpentry, roofing, plastering, foundations, landscaping and painting, and says improvements and repairs to septic systems, parking lots and driveways count too. So a repair isn't pulled into a different tax bucket the way it is in some states. Compare the models in [sales tax on labor vs. materials](https://www.brix.so/learn/sales-tax-on-labor-vs-materials).

There's one opt-out. A business that is **primarily** a retailer or manufacturer (more than 50% of the business) and only occasionally installs what it sells can elect to be treated as a retailer on **Form SUT-459**. It then charges sales tax to the customer instead of paying it to the wholesaler. The election must be filed at least 30 days before you change practices and is binding for five years. A business that's mostly contracting can't elect.

## What about materials, equipment and use tax in Vermont?

If you didn't pay the 6% at purchase, you owe **use tax** directly, on the same schedule as sales tax, using Form SUT-451. The department's page says local option tax doesn't apply to use tax. Read more in [use tax for contractors](https://www.brix.so/learn/use-tax-for-contractors).

- **Equipment:** always taxable when bought, rented or leased for use in Vermont, even on exempt jobs. Ladders, saws, nail guns, crane and excavator rentals, and blueprints all count.
- **Exempt projects:** building materials for structures owned by the state, the federal government, 501(c)(3) organizations or local development corporations aren't taxed. Get **Form S-3C**, Certificate of Exemption. Leased buildings don't qualify.
- **Out-of-state contractors:** owe use tax the same way. Equipment brought in for under six months can be taxed on fair rental value.
- **Vermont crews working out of state:** materials bought from Vermont vendors are still taxed. But use tax isn't due on materials stored in Vermont 180 days or less for a job in a state with no sales tax, such as [New Hampshire](https://www.brix.so/taxes/new-hampshire).
- **Tracked vehicles:** the sales tax on bulldozers and excavators is capped at $1,810 as of July 1, 2026.

## Does Vermont require a contractor license?

Not a general one, but registration is mandatory above the threshold. Under 26 V.S.A. § 5501, you must register with OPR before contracting with a homeowner for residential construction worth more than $10,000, including labor and materials. Residential means a building with four or fewer dwelling units. OPR lists renovation, repair, painting, paving, roofing, weatherization and heating, plumbing, solar and electrical work.

**Vermont state registrations and licenses for common trades**

| Trade | Agency | License or registration | Link |
| --- | --- | --- | --- |
| General contractor / home improvement | Office of Professional Regulation | Residential contractor registration for homeowner jobs over $10,000 | [OPR FAQs](https://sos.vermont.gov/residential-contractors/residential-contractor-faqs/) |
| Electrical | Division of Fire Safety (Department of Public Safety) | Electrical license (application covers all classifications) | [Electrical licensing](https://firesafety.vermont.gov/licensing/electrical) |
| Plumbing | Division of Fire Safety | Plumbing license (all classes), including heating and water treatment specialists | [Plumbing licensing](https://firesafety.vermont.gov/licensing/plumbing) |
| HVAC (gas and oil heat) | Division of Fire Safety | Natural gas and LP gas installer certifications; oil burner installer certification | [Gas certifications](https://firesafety.vermont.gov/licensing/gas-certifications) |
| Roofing | Office of Professional Regulation | No separate state roofing license; residential contractor registration applies over $10,000 | [OPR FAQs](https://sos.vermont.gov/residential-contractors/residential-contractor-faqs/) |
| Fire sprinklers, chimney sweeps, generators | Division of Fire Safety | Trade certifications (T-series) | [Trade licensing](https://firesafety.vermont.gov/node/80) |

_Checked 2026-10-19 on sos.vermont.gov, legislature.vermont.gov and firesafety.vermont.gov._

What registration involves, per OPR: $75 for individuals with no employees or $250 for businesses with employees, proof of liability insurance of $1,000,000 per occurrence and $2,000,000 aggregate, and a promise to use written contracts. Contracts must state the price basis, estimated start and finish dates, scope and materials, and how change orders get approved. Subcontractors hired by another contractor don't register, and neither do tradespeople licensed by the Department of Public Safety working within their license. Commercial-only contractors don't register unless they take a qualifying residential job.

Towns can still require permits, and OPR notes that it can't award damages or inspect quality. Check with your town before you start. More on how states differ: [contractor license basics](https://www.brix.so/learn/contractor-license).

## How much income tax does a Vermont contractor pay?

The latest schedules the department publishes are for **tax year 2025**. For single filers, rates are 3.35% up to $49,400, 6.60% to $119,700, 7.60% to $249,700 and 8.75% above that. Joint filers hit the 6.60% bracket at $82,500 and the top rate at $304,000. If your adjusted gross income tops $150,000, your tax is the greater of the schedule amount or 3% of AGI (less U.S. obligation interest).

- **Pass-through entities:** S corps, partnerships and LLCs filing Form BI-471 generally owe a $250 minimum entity tax, and they make nonresident withholding payments for out-of-state owners. We didn't find an elective pass-through entity tax on the department's business income page, so ask your CPA.
- **C corporations:** 6% on the first $10,000, 7% to $25,000, and 8.5% above that, with a minimum tax that starts at $100 for under $500,000 of Vermont gross receipts and rises with receipts.
- **Estimated payments:** if you're self-employed, the department expects quarterly payments that total 100% of last year's tax or 90% of this year's. The 2026 dates were April 15, June 15 and September 15, 2026, and January 15, 2027.

Set aside money each month for both governments. See [quarterly estimated taxes for contractors](https://www.brix.so/learn/quarterly-estimated-taxes-for-contractors), or use the [quarterly estimated tax calculator](https://www.brix.so/tools/quarterly-estimated-tax-calculator).

## Do Vermont contractors have to carry workers' comp?

Yes, if you have employees. 21 V.S.A. § 687 says employers "shall secure compensation for their employees" through an insurer or approved self-insurance. The Department of Labor administers the program. A sole proprietor or partner of an unincorporated business is outside the law only when several conditions are met, including a written contract stating the person has no employees and hasn't hired other independent contractors.

Corporations and LLCs can ask the Commissioner to exclude up to four executive officers, managers or members. If everyone is excluded and there are no employees, the business doesn't need a policy. Watch the statutory employer rule in § 601: if you hire an uninsured sub to do work that's part of your business, you can end up responsible for their workers. Details: [workers' compensation for contractors](https://www.brix.so/learn/workers-compensation).

> **A summary, not advice**
>
> This page condenses Vermont's official guidance as of October 2026. Your town may have a 1% local option tax and its own permits, and thresholds can change when the legislature acts. None of this is tax or legal advice. Run your setup past a CPA who knows Vermont.

BRIX tracks sales tax on your quotes and invoices, syncs with QuickBooks, and tracks your OPR registration and trade licenses with reminders before they expire. BRIX doesn't determine taxability, file returns or give tax advice.

- [Bookkeeping and tax help](https://www.brix.so/features/bookkeeping-taxes): Keeps expenses categorized, tracks 1099 subcontractors and sales tax, and reminds you of quarterly estimated tax dates. BRIX does not file taxes or give tax advice.
- [Invoicing and payments](https://www.brix.so/features/invoicing-payments): Turns finished jobs into invoices and politely chases unpaid ones until the money is in your account.
- [QuickBooks sync](https://www.brix.so/integrations/quickbooks): Syncs customers, invoices and payments with QuickBooks so the books match the jobs.
- [Compliance and permit tracking](https://www.brix.so/#use-cases): Tracks licenses, safety documents and permits and flags renewals before they lapse.

## Frequently asked questions

### Do Vermont contractors charge sales tax?

Not on real property work. The Department of Taxes says contractors should pay the 6% sales tax on materials when they buy them and not charge sales tax to the customer. The exception is a primarily retail or manufacturing business that has filed the SUT-459 election.

### Can I show sales tax on a Vermont contractor invoice?

No. The department says contractors can't itemize sales tax on real property invoices. You may include the statement that the contractor has paid all applicable Vermont taxes on materials used for the job.

### Who has to register as a residential contractor in Vermont?

Anyone contracting directly with a homeowner for residential construction worth more than $10,000, including labor and materials. Subcontractors hired by another contractor, employees of a registered business and DPS-licensed tradespeople working within their license are exempt.

### How much does Vermont residential contractor registration cost?

OPR lists $75 for an individual registration and $250 for a business registration. You also upload proof of liability insurance of at least $1,000,000 per occurrence and $2,000,000 aggregate.

### Are tools and equipment taxable for Vermont contractors?

Yes, always. The department says equipment bought, rented or leased for use in Vermont is taxable even on exempt projects. Only materials incorporated into an exempt project and supplies consumed on it can be exempt.

### Who licenses electricians and plumbers in Vermont?

The Division of Fire Safety in the Department of Public Safety. It also certifies natural gas and propane installers and oil burner installers. Licensed tradespeople don't need OPR residential registration for work within their license.

### Is there a minimum business tax in Vermont?

Pass-through entities filing Form BI-471 generally owe a $250 minimum. C corporations owe a minimum that starts at $100 for less than $500,000 of Vermont gross receipts and rises in tiers with receipts.

## Related

- [Do Contractors Charge Sales Tax on Labor or Materials?](https://www.brix.so/learn/sales-tax-on-labor-vs-materials)
- [What Is Use Tax for Contractors?](https://www.brix.so/learn/use-tax-for-contractors)
- [What Is a Contractor License?](https://www.brix.so/learn/contractor-license)
- [What Is Workers' Compensation Insurance?](https://www.brix.so/learn/workers-compensation)
- [Quarterly Estimated Taxes for Contractors: How They Work in 2026](https://www.brix.so/learn/quarterly-estimated-taxes-for-contractors)
- [Quarterly Estimated Tax Calculator for Self-Employed Contractors (2026)](https://www.brix.so/tools/quarterly-estimated-tax-calculator)
- [New Hampshire Contractor Taxes and Licensing: What Trades Should Know](https://www.brix.so/taxes/new-hampshire)
- [New York Contractor Taxes and Licensing: What Trades Need to Know](https://www.brix.so/taxes/new-york)
- [Massachusetts Contractor Taxes and Licensing: What Trades Need to Know](https://www.brix.so/taxes/massachusetts)
- [Self-Employment Tax Calculator (2026)](https://www.brix.so/tools/self-employment-tax-calculator)

## Sources

- [Vermont Department of Taxes — Contractors](https://tax.vermont.gov/node/129) (checked 2026-10-19)
- [Vermont Department of Taxes — Sales and Use Tax](https://tax.vermont.gov/business/sales-and-use-tax) (checked 2026-10-19)
- [Vermont Office of Professional Regulation — Residential Contractor FAQs](https://sos.vermont.gov/residential-contractors/residential-contractor-faqs/) (checked 2026-10-19)
- [Vermont Statutes — 26 V.S.A. Chapter 106, Residential Contractors](https://legislature.vermont.gov/statutes/fullchapter/26/106) (checked 2026-10-19)
- [Vermont Division of Fire Safety — Trade Licensing and Certifications](https://firesafety.vermont.gov/node/80) (checked 2026-10-19)
- [Vermont Division of Fire Safety — Electrical](https://firesafety.vermont.gov/licensing/electrical) (checked 2026-10-19)
- [Vermont Division of Fire Safety — Plumbing](https://firesafety.vermont.gov/licensing/plumbing) (checked 2026-10-19)
- [Vermont Division of Fire Safety — Gas Certifications](https://firesafety.vermont.gov/licensing/gas-certifications) (checked 2026-10-19)
- [Vermont Department of Taxes — 2025 Vermont Tax Rate Schedules](https://tax.vermont.gov/sites/tax/files/documents/TaxRateSched-2025.pdf) (checked 2026-10-19)
- [Vermont Department of Taxes — Estimated Income Tax](https://tax.vermont.gov/individuals/estimated-income-tax) (checked 2026-10-19)
- [Vermont Department of Taxes — Business Entity Income Tax](https://tax.vermont.gov/business/business-entity-income-tax) (checked 2026-10-19)
- [Vermont Department of Taxes — Corporate Income Tax](https://tax.vermont.gov/business/corporate-income-tax) (checked 2026-10-19)
- [Vermont Statutes — 21 V.S.A. § 687, Insurance required](https://legislature.vermont.gov/statutes/section/21/009/00687) (checked 2026-10-19)
- [Vermont Statutes — 21 V.S.A. § 601, Definitions (workers' compensation)](https://legislature.vermont.gov/statutes/section/21/009/00601) (checked 2026-10-19)

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Written by BRIX Editorial Team. Last updated 2026-10-19. General information, not tax, legal or financial advice.
Canonical: https://www.brix.so/taxes/vermont