Resale Certificates for Vending Machine Operators: Buy Inventory Tax-Free
The vending machine industry in the United States includes over 16,200 operating businesses and more than 7 million machines deployed in offices, schools, gyms, hospitals, and public spaces. Annual industry revenue exceeds $9 billion. From single-machine side hustlers to operators managing hundreds of locations, the model is the same: buy products at wholesale, sell them through machines at a markup.
A resale certificate is one of the first documents any vending operator should obtain. It allows you to purchase all the inventory you stock in your machines without paying sales tax at the point of purchase. Given that inventory costs typically represent 40% to 55% of vending revenue, the tax savings are meaningful.
Why Vending Operators Need a Resale Certificate
Every product inside your vending machine is inventory for resale. The candy bars, chip bags, bottled water, energy drinks, and gum are all items you buy for one purpose: to sell them to consumers through your machine.
Without a resale certificate, you pay sales tax every time you restock. That tax eats directly into your margins. With a certificate, you buy inventory at the net wholesale price and collect sales tax (when applicable) from the end consumer through the machine's pricing.
The Savings in Real Numbers
Here is what tax-free purchasing looks like for a typical vending operation:
| Operation Size | Monthly Inventory Cost | Annual Tax Saved (7%) | Annual Tax Saved (9%) |
|---|---|---|---|
| 5 machines | $1,500 | $1,260 | $1,620 |
| 15 machines | $4,500 | $3,780 | $4,860 |
| 30 machines | $9,000 | $7,560 | $9,720 |
| 75 machines | $22,500 | $18,900 | $24,300 |
Even a small 5-machine operation saves over $1,200 per year. At 30 machines, you are keeping nearly $8,000 to $10,000 that would otherwise go to sales tax on your wholesale purchases.
What You Can Buy Tax-Free
Products Sold Through Machines (All Qualify)
Every item dispensed through your vending machine and sold to a consumer qualifies for the resale exemption:
- Snacks: Chips, pretzels, crackers, cookies, granola bars, trail mix, nuts, jerky
- Candy: Chocolate bars, gummies, hard candy, mints, gum
- Beverages: Bottled water, soda, juice, sports drinks, energy drinks, iced tea, coffee (in bottled/canned form)
- Fresh/healthy options: Sandwiches, salads, fruit cups, yogurt, protein bars
- Non-food items in vending machines: Over-the-counter medications (aspirin, antacids), hygiene products (toothbrushes, combs), phone chargers, earbuds
If it goes into the machine and a customer pays to receive it, you can buy it tax-free with your resale certificate.
Packaging That Transfers to the Customer
- Bags and wrapping used to package bulk items into individual portions (if you portion and repackage products yourself)
What You CANNOT Buy Tax-Free
The Vending Machines Themselves
This surprises many new operators. The vending machine is capital equipment, not inventory for resale. You do not sell the machine to the consumer; you sell the products inside it. The machine is a tool of your business, similar to how a retailer cannot buy shelving tax-free.
| Purchase | Tax Treatment |
|---|---|
| Snack vending machine | Pay sales tax |
| Beverage cooler/machine | Pay sales tax |
| Coin mechanism or bill validator | Pay sales tax |
| Card reader upgrade | Pay sales tax |
| Machine stand or base | Pay sales tax |
Some states offer a separate capital equipment exemption for manufacturing, but vending machines rarely qualify under those provisions.
Maintenance and Repair Supplies
- Cleaning products for the machines
- Replacement parts (motors, coils, compressor parts)
- Tools used for repairs and maintenance
- Lubricants and sprays
Operating Supplies
- Vehicle costs (van, truck for restocking routes)
- Fuel
- Dolly or hand truck
- Locks and security hardware
- Office supplies and accounting software
- Electricity (at locations where you pay for the machine's power consumption)
These are all legitimate business expenses you can deduct on your income tax return, but they do not qualify for the resale certificate exemption.
Where to Buy Inventory Tax-Free
Warehouse Clubs
Costco, Sam's Club, and BJ's Wholesale Club are popular sourcing points for vending operators. Each accepts resale certificates.
Costco: Get a Business Membership and register your resale certificate for tax-exempt purchasing. The Costco Business Center locations are particularly useful for vending operators because they carry larger pack sizes.
Sam's Club: Register your certificate through Member Services. Your membership will be flagged for tax-exempt purchasing on qualifying items.
BJ's: Similar process. Present your certificate and set up tax-exempt status on your membership.
Wholesale Distributors
Dedicated vending and snack distributors are the backbone of larger operations:
- Vistar (a Performance Food Group company): One of the largest vending distributors in the U.S. They require a resale certificate to open an account.
- McLane Company: Major snack and beverage distributor. Resale certificate required.
- Core-Mark: Focuses on convenience and vending distribution.
- Local beverage distributors: Coca-Cola and Pepsi bottlers sell directly to vending operators. Provide your certificate when setting up your account.
Grocery and Retail Stores
Some operators, especially those with smaller routes, restock from retail stores during sales. You can use your resale certificate at most grocery chains and retail stores when buying for resale. See our retail arbitrage guide for a store-by-store breakdown.
Online Suppliers
Amazon Business, Webstaurant Store, and specialty vending suppliers like VendingWorld.com all accept resale certificates. Upload your certificate to your business account, and qualifying purchases will process tax-free.
State Variations on Vending Machine Sales Tax
Vending machine sales tax is not uniform across states. Some states apply the full sales tax rate to all vending sales. Others have special rules for food items, low-value transactions, or specific product categories.
States That Reduce or Exempt Small Vending Sales
A handful of states exempt vending sales below a certain price threshold or apply a reduced rate:
| State | Special Vending Rule |
|---|---|
| Virginia | Sales through vending machines are taxed at a reduced rate of 2.5% + applicable local tax (vs. 5.3% standard retail) |
| North Carolina | Vending operators can elect to pay tax on 50% of gross receipts |
| Ohio | Food sold through vending machines is taxed at a reduced rate |
| South Carolina | Items sold for $0.10 or less through vending machines are exempt |
States That Tax All Vending Sales at Standard Rate
Most states, including California, Texas, Florida, and New York, apply the standard sales tax rate to all vending machine sales. No special vending exemption exists.
Food vs. Non-Food in Vending
Many states that exempt grocery food from sales tax still tax food sold through vending machines. The reasoning is that vending machine food is considered "prepared food" or food "sold for immediate consumption," which falls outside the grocery exemption even when the item is a sealed, packaged product.
For example, a bag of chips bought at a grocery store checkout might be tax-exempt in a state with a food exemption. That same bag of chips, sold through a vending machine, might be fully taxable.
Check your state's specific rules. This distinction affects your pricing, your margins, and the sales tax you need to collect and remit.
The Side Hustle Angle
Vending machines are one of the most popular "passive income" side businesses. Many operators start with one or two machines while holding a full-time job. The part-time nature of the business does not change your tax obligations.
If you buy products and sell them through a vending machine, you are running a business. That means:
- Register for a sales tax permit in your state
- Obtain a resale certificate for tax-free inventory purchases
- Collect sales tax through your machine pricing (build it into the price)
- File sales tax returns on the schedule your state assigns (monthly, quarterly, or annually)
- Report income on your personal or business tax return
Starting small does not exempt you. One machine generating $200 per month in revenue still requires proper registration and tax collection.
How to Get Your Resale Certificate
The registration process is the same for vending operators as for any other retail business:
- Register with your state's Department of Revenue (or equivalent agency) for a sales tax permit
- Receive your resale certificate or permit number
- Provide the certificate to all your suppliers (distributors, warehouse clubs, online vendors)
Processing times vary by state, from same-day online approval to 2 to 4 weeks by mail.
We handle the full registration process for vending operators in all 50 states.
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Pricing Your Vending Products
Sales tax affects how you set prices in your machines. Since most vending machines accept limited denominations (quarters, $1 bills, $5 bills), you need to build sales tax into your retail price rather than adding it at the point of sale.
Example: You sell a snack for $1.50. In a state with 8% sales tax, the tax on that sale is $0.12. You cannot charge $1.62 in a vending machine. Instead, you set the price at $1.50 and remit the sales tax portion from your gross receipts.
The formula for backing out sales tax from a tax-inclusive price:
Tax owed = Gross receipts x (Tax rate / (1 + Tax rate))
On $1.50 at 8%: $1.50 x (0.08 / 1.08) = $0.111
Your net revenue on that $1.50 sale is $1.389, and you owe $0.111 in sales tax.
Record Keeping for Vending Operators
What to Track
| Category | Details |
|---|---|
| Machine collections | Date, location, amount collected per machine |
| Inventory purchases | Date, supplier, items, cost, tax status |
| Sales tax liability | Gross collections, tax rate, tax owed by location |
| Machine costs | Purchase price, repairs, upgrades |
| Operating expenses | Fuel, insurance, storage, route expenses |
Route Sheets
Many operators use route sheets to track collections and restocking for each machine visit. These sheets become your primary source of sales data. Record the meter reading or coin count, the products restocked, and the cash collected.
Software Options
For operators with 10 or more machines, vending management software like Parlevel, Cantaloupe (formerly USA Technologies), or VendSoft can automate inventory tracking, route planning, and sales tax calculation.
Common Mistakes Vending Operators Make
Not registering for a sales tax permit. Some operators, especially side hustlers, skip registration entirely. This creates growing liability. The tax you should have collected but did not still belongs to the state.
Buying machines with a resale certificate. The machine is not for resale. Only the products inside it qualify.
Ignoring location-based tax rates. If your machines are spread across multiple counties or cities with different tax rates, you need to track collections by location and remit at the correct rate for each.
Not building tax into vending prices. If your state charges 8% and you do not account for it in your pricing, you are effectively paying the sales tax out of your own revenue.
Using the certificate at Costco for personal groceries. Keep business and personal purchases completely separate. Run two transactions if you are buying for both purposes.
Get Started
A resale certificate is essential for any vending machine operator, from a single-machine side hustle to a 100-machine route. It reduces your inventory costs by the full sales tax rate in your area, and that savings compounds with every restock.
Apply for Your Resale Certificate -->
Questions about vending business taxes? Contact us for guidance.
Related Articles
- What Can You Buy Tax-Free with a Resale Certificate? - Full breakdown of what qualifies and what does not for the resale exemption.
- Side Hustle Sales Tax Guide - Tax obligations for part-time businesses, including vending operations.
- How Long Does It Take to Get a Resale Certificate? - State-by-state processing times for sales tax registration.