Missouri has enacted Senate Bill 872, bringing significant changes to the state’s sales tax regulations for the utility sector. Effective August 28, 2024, this legislation introduces a comprehensive sales and use tax exemption for various utilities, equipment, and materials used in generating or transmitting electricity. This move is part of Missouri’s broader effort to incentivize infrastructure development and enhance utility services across the state.
The exemption applies to electrical energy and gas (natural, artificial, or propane), water, coal, and other energy sources. It also covers chemicals, machinery, equipment, parts, and materials used in the generation, transmission, distribution, sale, or furnishing of electricity for light, heat, or power. Conduits, ducts, and other devices used for containing or carrying conductors for electricity transmission are exempt as well. This broad exemption is designed to reduce costs for utility providers and encourage the expansion and improvement of electricity infrastructure.
Moreover, any public utility that benefits from this exemption must report the savings to the Public Service Commission in their next general rate proceeding. The utility must include a statement confirming that the savings will be passed through to the public utility’s rate revenue requirement in the subsequent rate proceeding. This ensures that the financial benefits of the tax exemption are shared with consumers, potentially leading to lower utility rates.
Missouri’s new sales tax legislation reflects the state’s commitment to enhancing its utility infrastructure and fostering economic growth through strategic tax incentives. By alleviating the tax burden on essential infrastructure projects, the state aims to accelerate development and ensure broader access to critical services, including broadband internet and reliable electricity. (Missouri Senate Bill 872, effective August 28, 2024)