Manufacturing Sales Tax Exemptions: Making the Case

There are many opportunities to take advantage of sales tax exemptions in the manufacturing industry. Here are quick tips to uncover more and sometimes unexpected manufacturing exemptions for your company.

California Issues Guide for Manufacturing and Research & Development Partial Exemption

California issued an updated tax guide for the state’s expanded manufacturing, research, and development partial sales and use tax exemption.

Missouri Manufacturing Exemption Includes Certain Telecommunications Services

Missouri has enacted legislation clarifying that the state’s manufacturing exemption includes certain telecommunications services.

Iowa Enacts Changes to Definition of Manufacturer and Manufacturing

Iowa has enacted narrowing legislation that makes changes to the terms “Manufacturer” and “Manufacturing” for purposes of the state’s manufacturing exemption.

Separate Exemption Certificates Required for Multiple Locations in Tennessee

Manufacturers who wish to purchase electricity at a reduced rate or exempt from Tennessee sales and use tax must present a certificate of exemption for each manufacturing location.

Maryland Enacts Manufacturing Incentive Program

Maryland has enacted a manufacturing incentive program called the “More Jobs for Marylanders” program.

Kentucky Modifies Manufacturing Exemptions for Energy-Producing Fuels and Tangible Personal Property

Kentucky has enacted legislation that modifies the state’s sales and use tax manufacturing exemptions for energy-producing fuels and tangible personal property.

Purchase of Copier/Printer for Product Label Printing Exempt in Indiana

The purchase of a copier/printer used for printing product labels qualified for an Indiana sales and use tax exemption.

Illinois Issues Guidance on Applicability of Manufacturing Exemption to Commercial Printing

The Illinois Department of Revenue has issued a general information letter regarding whether commercial printing is considered “manufacturing” and if the state’s manufacturing exemption applies to electricity consumed to run printing machinery.

Liner Carts Subject to Partial Manufacturing Exemption in Indiana

The purchase of liner carts by a plastic parts manufacturer was determined to be partially exempt from Indiana use tax since the carts were an integral part of an integrated manufacturing process.

California Extends Partial Manufacturing Exemption

California has extended the end date for the state’s partial sales and use tax exemption for manufacturing from July 1, 2022 to July 1, 2030 and expanded the exemption’s coverage.

Graphic Arts Machinery and Equipment Included in Illinois Manufacturing Exemption

Effective July 1, 2017, graphic arts machinery and equipment are included in the Illinois manufacturing and assembling machinery and equipment exemption. Graphic arts equipment was previously included in a different exemption.

Arkansas to Phase-In Full Exemption for Certain Manufacturing Purchases

Arkansas amended its use tax refund for partial replacement and repair of certain machinery and equipment. Beginning July 1, 2022, purchases qualifying for the tax refund will be 100% exempt.

Dismantling and Demolition Service Do Not Qualify for Georgia Manufacturing Exemption

A dismantling and demolition services provider did not qualify for Georgia’s sale and use tax exemption for manufacturers as it was not classified nor generally regarded as a manufacturer

Utah Enacts Exemptions for Auto Manufacturers and Industrial Gas Manufacturers

Effective July 1, 2017, Utah enacted a sales and use tax exemption on purchases or leases of certain machinery, equipment, and repair or replacement parts by qualifying automobile manufacturing facilities in the state.

Ventilation System Does Not Qualify for Manufacturing Exemption in Wyoming

A ventilation system purchased by a beet processing plant was denied a manufacturing equipment exemption from Wyoming sales and use tax because it did not qualify as machinery that operated directly and predominantly in manufacturing.

Iowa Adopts Amendments to Regulations for Manufacturing Exemption

Effective November 16, 2016, the Iowa Department of Revenue adopted amendments to its regulations concerning the state’s manufacturing exemption, which was expanded to include replacement parts and supplies earlier in the year.

Arizona Amends Electricity and Gas Exemption for Manufacturing and Smelting Businesses

Arizona modified the exemption criteria for the qualified manufacturing or smelting business exemption as it applies to the state’s transaction privilege and use tax deduction of electricity and natural gas sales.

Manufacturer’s Purchases of Shipping Labels and Printer Ribbons Are Taxable in Indiana

Purchases of shipping labels and printer ribbons by a manufacturer of medical devices did not qualify for an exemption from Indiana use tax since the products did not constitute an integral and material part of the finished product.

Michigan Announces Non-Acquiescence to Industrial Processing Decision

The Michigan Department of Treasury will not follow the decision of Central Michigan Cementing Services LLC v. Depart of Treasury, an industrial processing case, in similar circumstances for other taxpayers.

Virginia Expands Research and Development Exemption

Effective July 1, 2016, Virginia’s sales and use tax exemption for tangible personal property purchased or leased for use directly in research or development in the experimental or laboratory sense was expanded.

Electricity Used for Freezing Finished Food Products Doesn’t Qualify for Arkansas Reduced Sales Tax Rate

Electricity used in cold storage facility for freezing finished food products does not qualify for Arkansas reduced sales tax rate. More…

Hand Tools Priced $100 or Less Used for Certain Activities Exempt in Idaho

Idaho sales tax exemption can apply to hand tools used for certain activities, effective 07/01/16. More…

Iowa Makes Changes to Manufacturing Exemption

Iowa modified sales tax exemptions for items used in manufacturing, effective 03/21/16. More…