Tennessee Issues Guidance on Exemption for Agricultural Water

Effective July 1, 2019, Tennessee enacted a sales and use tax exemption for water purchased by a qualified farmer or nursery operator that is used directly in the growing and producing of food or fiber for human or animal consumption, as well as nursery and greenhouse crops for sale. In order to qualify for the exemption, the water for agricultural use must be separately metered from water for non-agricultural uses. Examples of tax-exempt uses include (but are not limited to):

  • Irrigation of fruits, vegetables and other agricultural crops, and nursery flowers and plants
  • Watering livestock
  • Application of fertilizers and pesticides
  • Washing agricultural produce

In order to make tax exempt purchases of agricultural water, the purchaser must present a copy of their Agricultural Sales and Use Tax Exemption Certificate to the seller. Alternatively, the purchaser may present a completed Streamlined Sales Tax Certificate of Exemption that includes the exemption number on the purchaser’s Agricultural Certificate issued by the Tennessee Department of Revenue. This exemption does not apply to sales of utility water for residential or other business uses. (Important Notice No. 19-10, Tennessee Department of Revenue, June 2019)

Posted on March 20, 2020