A vending machine is any automated or electronic device that dispenses goods (tangible personal property) when the buyer inserts payment into the machine.
An amusement device isn’t a vending machine. Read more on our Amusement Device webpage.
Examples of vending machine goods include:
- Food/drinks
- Photographs
- Photocopies
- Newspapers
You don’t collect tax on sales from automated machines that don’t dispense taxable goods or services. Examples include:
- Blood pressure machines
- Washers and dryers
- Car washes and vacuums
- Air compressors
- Cell phone chargers
Getting a seller’s permit
To collect and submit the tax from a vending machine, you need to get a seller’s permit. Anyone with a sales tax permit must file sales tax reports and submit the appropriate sales tax. You can apply for a seller’s permit online.
You need only one seller’s permit for all your machines. However, you must visibly display your name, address, and seller’s permit number at each place where you have machines. To do this, post the required information on the front of one or more vending machines in each group of machines.
Calculating sales tax
Calculate and collect the sales tax using the following formulas:
- Items sold for 11¢ or less: Don’t tax.
- Items sold for 12¢ through $1: Tax at 117% of the seller’s cost of the goods.
- Items sold for $1.01 or more: Tax on the full retail sales price.
| Line # on Form 850 | ||
|---|---|---|
| Line 1 | Total sales | $35.10 |
| Line 2 | Less nontaxable sales | 0 |
| Line 3 | Net taxable sales | $35.10 |
| Line 7 | Tax due | $2.11 |
Line 7 calculation: $35.10 x 6% (total sales x current tax rate)
| Line # on Form 850 | ||
|---|---|---|
| Line 1 | Total sales | $188.68 |
| Line 2 | Less nontaxable sales | 0 |
| Line 3 | Net taxable sales | $188.68 |
| Line 7 | Tax due | $11.32 |
Line 7 calculation: $188.68 x 6% (total sales x current tax rate)
Buying goods for your vending machines
When you buy goods to resell in your machines, don’t pay sales tax. Give your supplier a completed ST-101, Sales Tax Resale or Exemption Certificate, to buy your goods exempt from sales tax.
Paying sales tax when you buy, sell, or lease vending machines
Exempt vending machines
Machines that sell only taxable goods and accept only legal money are exempt from sales tax. This means the machines can accept only coins, bills, debit cards, or credit cards.
Taxable vending machines
You must pay sales tax on the following machines:
- Machines that accept only legal money, but sell nontaxable goods.
- Machines that accept only legal money, but sell only goods for 11 cents or less.
- Machines that use tokens or prepaid card readers (such as those reloadable with credits that can be redeemed to make a purchase), even if they also accept coins, bills, and debit or credit cards.
Note: If you buy a machine that is not set up to accept only legal money or change a machine that sells taxable goods to accept only legal money after you buy it, the device remains taxable; you can’t get a sales tax refund on the purchase.
Splitting income between retailer and machine’s owner
When revenues from a vending machine are split between a retailer and the owner of the machine, the one having the key to the coin box is usually responsible for reporting and submitting sales tax.
For example, if the owner of the machine has the key to the coin box and control of the proceeds, the owner is responsible for the sales tax. However, if the retailer is given control of the proceeds under a written or verbal agreement, the retailer is responsible for the sales tax.
Buying repair parts and supplies for your vending machine
You must pay sales tax on repair parts and supplies for all vending machines, even if the machine itself isn’t taxed. This includes parts used in refurbishing or upgrading devices.
Laws and rules
Learn more about vending machines.
- Sales Price – Vending Machines
- Money Operated Dispensing Equipment
- Amusement Devices