Utility Sales Tax Exemptions By State
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.
Alabama Sales and Use Tax
Alaska
No sales tax and therefore no exemptions needed.
Alaska Sales and Use Tax
Arkansas
Energy used in certain types of production is exempt. See link for more information.
Arkansas Sales and Use Tax
Arizona
Electricity and Natural Gas purchased by a business principally engaged in manufacturing or smelting operations, that uses 51% or more of the purchased utility in the manufacturing or smelting operation.
Arizona Sales and Use Tax
California
The sale of gas, electricity and water, including steam and geothermal steam, brines, and heat is exempt from taxation if delivered through mains, lines, or pipes.
California Sales and Use Tax
Connecticut
Utilities for fabrication – building must be metered and no less than 75% of the utilities must be used in fabrication process
Connecticut Sales and Use Tax
Colorado
Must be used in the continuing business activity of producing or processing tangible personal property.
Colorado Sales and Use Tax
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.
Delaware Sales and Use Tax
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
Florida Sales and Use Tax
Georgia
Can apply for electricity exemption if 50% or more of the electricity is directly used in the production of the product.
Georgia Sales and Use Tax
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.
Idaho Sales and Use Tax
Illinois
General Rule is no exemptions on utilities. However, there are incentive programs where tax incentives might include exemptions for utilities, but qualifications exist.
Illinois Sales and Use Tax
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
Indiana Sales and Use Tax
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.
Iowa Sales and Use 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.
Kansas Sales and Use Tax
Kentucky
Energy costs associated with manufacturing must exceed 3% of the total cost of production to be exempt.
Kentucky Sales and Use Tax
Maryland
The sale of gas, electricity, steam, oil or coal consumed directly and predominantly in the production activity is not subject to the tax
Maryland Sales and Use Tax
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.
Massachusetts Sales and Use Tax
Michigan
Utilities are 100% exempt when metered separately for exclusive industrial processing use.
Michigan Sales and Use Tax
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
Minnesota Sales and Use Tax
Fast Facts >>
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.
Missouri Sales and Use Tax
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
Nebraska Sales and Use Tax
New Jersey
Very limited manufacturing exemption in specific economic development areas and even then, only for future savings.
New Jersey Sales and Use Tax
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.
New York Sales and Use Tax
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.
Ohio Sales and Use Tax
Oklahoma
Oklahoma allows businesses to claim exemption on the portion of their utility used in production. ‘Production’ includes those processes and activities consisting of manufacturing, compounding, processing, assembling, or preparing of articles for sale as tangible personal property.
Oklahoma Sales and Use Tax
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.
Pennsylvania Sales and Use Tax
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.
Rhode Island Sales and Use Tax
South Carolina
Coal, coke, or other fuel for manufacturers, transportation companies, electric power companies, and processors
South Carolina Sales and Use Tax
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.
Tennessee Sales and Use Tax
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
Texas Sales and Use Tax
Utah
In Manufacturing, sales of natural gas, electricity, heat, coal, fuel oil, or other fuels for industrial use are exempt.
Utah Sales and Use Tax
Wisconsin
Fuel and Electricity “consumed in manufacturing,” or used to operate machines and equipment used directly in the step-by-step manufacturing process.
Wisconsin Sales and Use Tax
Fast Facts >>
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
Wyoming Sales and Use Tax
