Vermont Repeals Exemption on Cloud Software Effective July 1, 2024

The Vermont Legislature has overridden a veto by Governor Phil Scott to enact legislation that repeals the state’s sales and use tax exemption for remotely accessed prewritten computer software, commonly referred to as cloud software. As a result, effective July 1, 2024, sales of cloud software – such as Software as a Service (SaaS) – are subject to Vermont’s 6% sales and use tax.

The enacted legislation specifies that “tangible personal property” includes prewritten software regardless of the method in which the prewritten computer software is paid for, delivered, or accessed. The legislation repeals 2015 Acts and Resolves, No. 51, Sec. G.8, which created a sales tax exemption for prewritten computer software accessed remotely. Note that prewritten computer software not accessed remotely was and remains subject to Vermont sales and use tax. Sellers making sales of cloud software in Vermont regardless of method of delivery will need to account for this change in taxability effective July 1, 2024. (H. 887, Laws 2024)

Posted on June 28, 2024