Schedule a Meeting

Manufacturing Sales Tax Exemption by States

Home » Manufacturing Sales Tax Exemption by States

There are many states offer manufacturing sales tax exemptions for electric, gas, water/sewer used in production. These exemptions are based on the state sales tax laws which can be seen as below:

Examples of Studies Required by Different States

Alabama

Energy used in electrolytic or electrothermal manufacturing in certain situations is exempt.
http://revenue.alabama.gov/salestax/

Alaska

No sales tax and therefore no exemptions needed.
http://www.tax.alaska.gov/programs/programs/index.aspx?10002

Arkansas

Energy used in certain types of production is exempt. See link for more information.
http://www.dfa.arkansas.gov/offices/exciseTax/salesanduse/Pages/default.aspx

Arizona

Currently, fuels and energy do not fall under the state’s manufacturing exemption and are taxable. However, this is changing very soon..
http://www.azdor.gov/Home.aspx

California

No state tax on utilities for manufacturing and residential when delivered through main, line or pipes (by statute).
http://www.boe.ca.gov/sutax/sutprograms.htm

Connecticut

Utilities for fabrication – building must be metered and no less than 75% of the utilities must be used in fabrication process
http://www.ct.gov/DRS/cwp/view.asp?a=1454&q=271482&drsPNavCtr=%7C

Colorado

Must be used in the continuing business activity of producing or processing tangible personal property.
http://www.colorado.gov/revenue

Delaware

Manufacturers are entitled to a reduction of the public utility tax on consumption of electricity commodities or services from 4.25% to 2.00% for qualified licensed manufactures.
http://revenue.delaware.gov/services/Business_Tax/Exemptions.shtml

Florida

Manufacturing plants that use at least 75% of the total plant usage of electricity or steam to operate qualifying machinery and equipment receive a 100% exemption of all charges to the plant
http://dor.myflorida.com/dor/taxes/sales_tax.html

Georgia

Can apply for electricity exemption if 50% or more of the electricity is directly used in the production of the product.
https://etax.dor.ga.gov/salestax/st3forms/st3_indx.aspx

Idaho

Unlikely that anyone in Idaho can claim a refund on the utilities because they are already relieved from taxes,. However, can claim one if found and forms are mentioned.
http://tax.idaho.gov/i-1023.cfm

Illinois

General Rule is no exemptions on utilities. However, there are incentive programs where tax incentives might include exemptions for utilities, but qualifications exist.
http://www.revenue.state.il.us/#&panel1-1

Indiana

Use in manufacturing or one of the other listed production processes begins at the point of the first operation or activity constituting part of an integrated production process and ends at the point that the production process has altered the item to its completed form, including packaging if required
http://www.ai.org/dor/

Iowa

Fuel consumed in processing is exempt from Iowa sales and use tax. “Fuel” includes, but is not limited to, heat, steam, electricity, gas, water or any other tangible personal property consumed in creating heat, power, steam, or for generating electric current.
http://www.state.ia.us/tax/

Kansas

Electricity, gas, water and heat used in agriculture, consumed in production, as ingredient or component part,irrigation of crops, movement in interstate commerce, noncommercial residential, providing taxable services, and severing of oil is sales tax exempt.
http://www.ksrevenue.org/index.html

Kentucky

Energy costs associated with manufacturing must exceed 3% of the total cost of production to be exempt.
http://revenue.ky.gov/business/salesanduse.htm

Maryland

The sale of gas, electricity, steam, oil or coal consumed directly and predominantly in the production activity is not subject to the tax
http://taxes.marylandtaxes.com/Business_Taxes/Business_Tax_Types/Sales_and_Use_Tax/Filing_Information/Tax_Exemptions/Exemption_Certificates/

Massachusetts

Water, gas, steam, or electricity consumed and used directly and exclusively in an industrial plant in the actual manufacture of tangible personal property to be sold. Gas, steam, or electricity consumed and used in the heating of such industrial plant.
http://www.mass.gov/dor/all-taxes/sales-and-use/

Michigan

Utilities are 100% exempt when metered separately for exclusive industrial processing use.
http://www.michigan.gov/taxes/0,1607,7-238-43529-154427–,00.html

Minnesota

Electricity, gas or steam used or consumed in agricultural or industrial production is exempt from sales and use tax. Exemption does not apply to space heating, lighting or water used or consumed in non-production areas such as office or administrative areas
http://www.revenue.state.mn.us/businesses/sut/Pages/Tax-Information.aspx

Missouri

To receive a sales tax exemption and/or refund, utility costs must be more than 10% of the total cost of production. Fuel consumed in manufacturing or creating gas, power, steam, and electrical current to be sold ultimately at retail.
http://dor.mo.gov/business/sales/

Nebraska

The sale, purchase use, or other consumption of electricity, coal, gas, fuel, oil, diesel fuel, tractor fuel, gasoline, nuclear fuel, butane, and compressed fuel that includes compressed natural gas and liquefied petroleum gas may be exempt from the sales and use tax
http://www.revenue.nebraska.gov/salestax.html

New Jersey

Very limited manufacturing exemption in specific economic development areas and even then, only for future savings.
https://www1.state.nj.us/TYTR_BusinessFilings/jsp/common/Login.jsp?taxcode=55

New York

Purchases of fuel, gas, electricity, refrigeration and steam service, of whatever nature, for use or consumption directly and exclusively in the production of tangible personal property for sale are exempt from all state and local taxes. EXCEPT in New York City where they remain subject to the 4% local sales and use tax.
http://www.tax.ny.gov/

Ohio

Gas, water, steam and similar substances used in the manufacturing operation; machinery and equipment used for, and fuel consumed in, producing or extracting those substances.
http://www.tax.ohio.gov/sales_and_use.aspx

Oklahoma

Purchases by a manufacturer of tangible personal property or services for use in a manufacturing operation are exempt from sales and use taxes.
http://www.tax.ok.gov/saleusepub.html

Pennsylvania

The purchase of steam, natural and manufactured gas and electricity, through a metered device; bottled gas; fuel oil; or kerosene for direct use in manufacturing are exempt.
http://www.portal.state.pa.us/portal/server.pt/community/sales___use_tax/14702

Rhode Island

Coal, fuel oil, electricity, natural gas, artificial gas, steam, refrigeration, and water when used to generate power or to maintain a fixed temperature necessary in the production of tangible personal property for resale.
http://www.tax.ri.gov/taxforms/sales_excise/sales_use.php

South Carolina

Coal, coke, or other fuel for manufacturers, transportation companies, electric power companies, and processors
http://www.sctax.org/tax+information/sales+and+use+tax/use_tax/usetaxexemps.htm

Tennessee

Gas, electricity, fuel oil, coal and other energy fuels sold to or used by manufacturers is taxed at a rate of 1.5% state and 0% local. However, such substances can be entirely exempt if used directly in the manufacturing process and the tax commissioner approves the request.
http://www.tn.gov/revenue/tntaxes/salesanduse.shtml

Texas

Utility must be predominantly used for exempt activities measured by meter. Includes utilities used for lighting, cooling, and heating in the manufacture area during actual manufacturing or processing
http://www.window.state.tx.us/taxinfo/sales/

Utah

In Manufacturing, sales of natural gas, electricity, heat, coal, fuel oil, or other fuels for industrial use are exempt.
http://tax.utah.gov/sales

Wisconsin

Fuel and Electricity “consumed in manufacturing,” or used to operate machines and equipment used directly in the step-by-step manufacturing process.
http://www.revenue.wi.gov/salesanduse/

Wyoming

Power and Fuel (electricity and natural gas) consumed directly in the manufacturing process, where “directly in the manufacturing process” means an item manufactured from invented raw or prepared material beginning when it is moved from plant inventory…and ending when manufacturing has altered the raw or prepared material to its completed form, including packaging
http://www.sutexemptions.com/states/wyoming-exemptions.html