Vermont’s New Tax Legislation on Remotely Accessed Software

Starting July 1, 2024, Vermont will begin taxing sales of remotely accessed software under Bill H.887. Although initially vetoed by the governor, the legislature overturned the veto on June 17, 2024.

Previously, Vermont categorized “prewritten computer software” as “tangible personal property,” but had exempted remotely accessed software since 2015. The new law revises the definition to include prewritten computer software “regardless of how it is paid for, delivered, or accessed,” thereby eliminating the 2015 exemption, and requiring sellers of SaaS to be wary of nexus and sales tax collection in Vermont.

The legislature initially considered a more extensive bill to tax platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS) sales. However, they decided to narrow the scope to prewritten computer software to avoid taxing PaaS or IaaS. Legislative records contain various committee reports and presentations that clarify the differences between remotely accessed software and PaaS or IaaS.