Vending machine sales

Sales of merchandise through a vending machine are subject to Retailing business and occupation (B&O) tax and retail sales tax. Merchandise may include items such as laundry detergent, fabric softener, and dryer sheets.

Vending machine owners are responsible for reporting the gross sales from their vending machines.

If the sales are subject to sales tax, the retail sales tax amount does not need to be stated separately from the selling price. Owners may use the Tax in Gross deduction for the amount of sales tax included in the selling price. The Tax in Gross deduction is calculated by dividing the gross machine proceeds by 1+ the sales tax rate and subtracting that amount from the gross machine proceeds.

Example: Gross machine proceeds of $40.00 with a sales tax rate of 8%.

$40.00 – ($40.00 / 1.08) = $2.96 Tax in Gross deduction

Commissions

Self-service and coin-operated laundry businesses that earn a commission or fee for allowing vending machine owners to place their machines at the business must report that income under the Service and Other Activities B&O tax classification.

Litter Tax

Litter tax applies to vending machine sales of cleaning agents and toiletries. The amount subject to tax will be the taxable amount under Retailing B&O tax, which is gross proceeds less any Tax in Gross deduction.

For more information, please see our web page on Litter tax.

Purchases for resale

You may use a reseller permit to purchase items you sell in your vending machine without payment of retail sales tax. If you pay sales tax to the vendor, you may claim a Taxable Amount for Tax Paid at Source deduction for the value of the taxed purchases.