As a vending machine operator and owner, you are required by law to pay taxes on vending machine sales.
However, the amount of sales tax collected will depend on your legal structure, the state in which your business is located and the type of vending machine you operate.
In this article, we’ll take a look at why you have to pay taxes on vending machine sales, how it’s calculated and where you can find more information for your state’s requirements.
Why Do You Have To Pay Taxes On Vending Machines?
As a business owner, you’re required to pay taxes on all income that your business earns. This includes income from vending machine sales. The amount of tax you’ll need to pay will depend on the state in which your business is located.
How Is Tax Calculated On Vending Machine Sales?
The tax on vending machine sales is calculated as a percentage of the gross receipts. For example, if your state has a 5% tax on vending machine sales and you sell a product for $1, you’ll need to pay 5 cents in taxes.
In another example, let’s consider what your tax may look like after one month. If each can of soda you sell is priced at $1.50, and you sell 40 sodas per day, your daily income would be $60.00. In an average month, you would make $1,800.00 from selling sodas in your vending machine.
Let’s say, for example, your state has a 5% tax on vending machine sales. In this scenario, you would need to pay 5% of the $1,800.00 in taxes for the month. Your tax would amount to $90.00 per month on this basis.
In another example, if you are a candy vending machine owner, and the average price per piece of candy is $1.00, and you sell 100 candies per day, your daily income would be $100.00. In one month, you would make $3,000.00 from the vending machine sales of candy.
If your state has a 5% tax on vending machine sales, you would need to pay $150.00 in taxes for the month based on the 5% tax on $3,000.00 in total vending machine sales for candy.
As you can see, the amount of taxes you’ll need to pay on vending machine sales will vary, depending on the state requirements for business taxes, the cost of the products you are selling and the total amount of products you sell.
What Are The Requirements For Tax Reporting On Vending Machine Sales?
Depending on state business tax laws, you’ll need to report your vending machine sales on your quarterly or annual income tax return. You’ll need to include the total cost of goods you paid, overhead charges, shipping or transportation charges you paid, and the sales volume you recorded. You’ll also want to report any taxes you paid on a quarterly basis during the taxable year.
When Are You Exempt From Sales Tax?
In some cases, you may be exempt from paying sales tax on vending machine sales. This includes circumstances wherein you are selling items that are considered to be “living necessities,” such as food or medicine.
You’ll need to check with your state’s taxation department to see if you qualify for an exemption in this regard.
Get More Information About Your State
In general, sales tax is imposed on the sale of goods and services. However, each state has its own specific laws regarding sales tax. Therefore, it’s important to check with your state’s tax authority to determine the exact amount of sales tax you’ll need to pay on vending machine sales.
| State | Vending Machine Sales Tax Rate |
| Alabama | 3% |
| Alaska | 0% |
| Arizona | 5.60% |
| Arkansas | 6.50% |
| California | 7.25% |
| Colorado | 2.90% |
| Connecticut | 6.35% |
| Delaware | 6% |
| District of Columbia | 5.75% |
| Florida | 6% |
| Georgia | 4% |
| Hawaii | 4% |
| Idaho | 6% |
| Illinois | 6.25% |
| Indiana | 7% |
| Iowa | 6% |
| Kansas | 6.50% |
| Kentucky | 6% |
| Louisiana | 4% (state); 2% – 10% (local) |
| Maine | 5.50% |
| Maryland | 6% |
| Massachusetts | 6.25% |
| Michigan | 6% |
| Minnesota | 7.38% |
| Mississippi | 7% |
| Missouri | 4.23% |
| Montana | 0% |
| Nebraska | 5.50% |
| Nevada | 4.60% |
| New Hampshire | 0% |
| New Jersey | 6.63% |
| New Mexico | 5.13% |
| New York | 4% (state); 0.5% – 4% (local) |
| North Carolina | 4.75% |
| North Dakota | 5% |
| Ohio | 5.75% |
| Oklahoma | 4.50% |
| Oregon | 0% |
| Pennsylvania | 6% |
| Rhode Island | 7% |
| South Carolina | 6% |
| South Dakota | 4% |
| Tennessee | 7% |
| Texas | 6.25% |
| Utah | 4.85% |
| Vermont | 6% |
| Virginia | 4% |
| Washington | 0% |
| West Virginia | 6% |
| Wisconsin | 5% |
| Wyoming | 4% |
In conclusion, most states tax vending machine sales, though the rates can vary considerably. If you are planning to start or operate a business that includes vending machines, factor in the taxes you will need to pay on the sales made from these machines.
