Industry Guide
Manufacturing Sales Tax Exemptions
Most states exempt machinery and equipment used in manufacturing, but the rules on integrated processes, repair parts, and consumables vary widely. Here is how to qualify and document the exemption.
State manufacturing exemptions reward businesses that can demonstrate how each
asset fits into the production process. The strongest positions pair a clear
process map with current documentation and the controlling statute or rule for
the jurisdiction.
Use the research tool below to pull the controlling authority for your state
before you rely on a position.
What typically qualifies
States that offer a manufacturing exemption generally cover:
- Machinery and equipment used directly in production
- Repair and replacement parts for exempt machinery
- Consumables and supplies that become part of the process
Where exposure hides
Common audit findings include:
- Equipment used in non-production stages (e.g., warehousing, administration)
- Missing or stale exemption certificates
- Misapplied integrated-plant or predominant-use tests