Manufacturers' Sales / Use Tax Exemption

Regarding Machinery and Equipment

Manufacturers, processors for hire, and manufacturers who perform research and development are not required to pay the sales or use tax on machinery and equipment used directly in the manufacturing or research operations. Charges for labor and services for installing the machinery and equipment are also not subject to the sales or use tax. Charges for repair labor and parts (if the parts have a useful life of at least one year), cleaning, altering, or improving the qualified machinery and equipment are exempt from the tax as well.

'Machinery and equipment' means industrial fixtures, devices, and support facilities, including pollution control equipment installed and used in a manufacturing operation to prevent air or water pollution, or contamination that might otherwise result from the manufacturing operation. The term does not include hand-powered tools, items with a useful life of less than one year, buildings, and building fixtures that are not an integral part of the manufacturing operation.

Exemption Certificate

The purchaser must provide the seller with an exemption certificate at the time of purchase. Both the seller and the purchaser must keep copies of the exemption certificates for five years. Read more information about this program.