States offering utility tax exemptions and refunds
States listed all have exemption/refund opportunities for manufacturers and processors.
ARKANSAS
- Beginning July 2007 through June 30, 2008 state tax will be 4.5% vs 5%
- Beginning July 1, 2008 and thereafter, rate will be 4% vs 6%
- Utility must be used directly in manufacturing
- Manufacturing area must be separately metered from taxable area
COLORADO
- Beginning March of 2010, the exemption for industrial processes has been suspended but remains for agricultural processes.
- Lighting does qualify
- Study required
CONNECTICUT
- Predominant use (76% or more of utility used in manufacturing allows for 100% exemption)
- If less than 75% used in manufacturing, partial exemption is possible
- Study required
FLORIDA
- Tiered exemption system used for electricity exemptions
- Under 50% used in manufacturing does not qualify for exemption
- 50% through 75% used in manufacturing receives 75% exemption
- 76% and above used in manufacturing receives 100% exemption
- Only specific industries qualify. Check SIC code in classification
manual
- Study required.
GEORGIA
- Effective 1/1/2011, in order for manufacturers to qualify, the average
annual direct cost of electricity must exceed 50% of the average annual cost
of all production materials including the cost of electricity
IDAHO
- Exemption on all utilities delivered by pipes, wires or mains
INDIANA
- Predominant use (51% or more of utility used in manufacturing allows for 100% exemption)
- If less that 50%, then a refund is available but no future exemption is granted. Annual refunds must be applied for from State
- Refunds and exemptions for water used in all or part of manufacturing and / or processing does qualify
- Study required
IOWA
- Actual percentage of utility used in manufacturing
- Updates required every 3 years
- Research & Development does qualify
- Refunds and exemptions for water used in all or part of manufacturing and / or processing does qualify
- Study required
KANSAS
- Actual percentage of utility used in manufacturing
- Research & Development does qualify
- Refunds and exemptions for water used in all or part of manufacturing and / or processing does qualify
- Refund period is now limited to 12 months
- Study required
KENTUCKY
- 100% exemption if the cost of natural gas and electricity exceeds 3% of the overall cost of production
LOUISIANA
- Beginning July 1, 2008, sales and use tax rate reduced from 3.3% to 2.3%.
- After July 1, 2009, no tax applies to electricity and natural gas
MAINE
- 95% exemption if manufacturing occurs.
- No study required
MARYLAND
- Predominant use (51% or more of utility used in manufacturing allows for 100% exemption).
- Study required
MASSACHUSETTS
- Predominant use (75% or more of utility used in manufacturing allows for 100% exemption).
- Refunds and exemptions for water used in all or part of manufacturing and / or processing does qualify
- Research & Development does qualify
- Study required
MICHIGAN
- Actual percentage of utility used in manufacturing.
- Research & Development does qualify
- Study Required
MINNESOTA
- Limit of two(2) refund claims only per year (regardless of tax type)
- Actual percentage of utility used in manufacturing.
- Refunds and exemptions for water used in all or part of manufacturing and / or processing does qualify
- Research & Development does qualify
- Study Required
MISSISSIPPI
- Automatic reduction from the full tax rate down to 1.5% for utilities
used in production.
- Taxpayer needs to obtain direct pay permit from state and remit the
appropriate tax to state
- Water qualifies for exemptions.
- Study required
MISSOURI
There are two different ways to get exemption
/ refunds.
- Utility cost must be more than 10% of the total cost of production.
To determine percentage take total production cost minus utilities cost then
divide utility cost by production cost
- An application has to be submitted to the state (Form 1749E-10) for each
calendar year you are claiming refund
OR
- Tiered system
- Actual percentage must be calculated. (Square footage may be used)
- 1% through 25% used in manufacturing receives 25% exemption
- 26% through 50% used in manufacturing receives 50% exemption
- 51% through 75% used in manufacturing receives 75% exemption
- 76% and above receives 100% exemption
- Special exemption for use of recycled materials
- Study required
NEBRASKA
- Predominant use (51% or more of utility used in manufacturing allows for 100% exemption).
- Refunds and exemptions for water used in all or part of manufacturing and / or processing does qualify
- Study required
NEW JERSEY
- Must be in Enterprise Zone.
- Must employ at least 250 people.
- Several other highly restrictive exemptions for qualifying companies available
NEW YORK
- Actual percentage of utility used in manufacturing.
- Research & Development does qualify
- Utility company applies 100% exemption on bill
- Taxpayer accrues and pays taxable portion to State using form ST100
- Study required
NORTH CAROLINA
- Reduced tax rate to 2.83%
- Can be reduced to .17% of megawatt volume of electricity received during the previous calendar year is more that 900,000 for the next fiscal year
OKLAHOMA
- Predominant use (51% or more of utility used in manufacturing allows for 100% exemption).
- Study required
PENNSYLVANIA
- Actual percentage of utility used in manufacturing
- Lighting in plant qualifies
- Study required
RHODE ISLAND
- Actual percentage of utility used in manufacturing
- Study required
SOUTH CAROLINA
- Actual percentage of utility used in manufacturing
- Study required
TENNESSEE
- Reduction from the full tax rate down to 1.5% if you are a manufacturer
- Water does qualify
- No Study required
TEXAS
- Predominant use (51% or more of utility used in manufacturing allows for 100% exemption).
- Predominant use study must have engineering statement on study. A
licensed engineer must affix his or her stamp and sign attesting to the
accuracy of the study OR the engineer must be a graduate from a accredited
engineering school to sign off on the study
- Predominant use studies are required
UTAH
- Predominant use (51% or more of utility used in manufacturing allows for 100% exemption).
- Study with only taxable usage required
VIRGINIA
VERMONT
- Actual percentage of utility used in manufacturing
- Valid for three years only
- Study required
WEST VIRGINIA
WISCONSIN
- Actual percentage of utility used in manufacturing
- Study required
WYOMING
- Actual percentage of utility used in manufacturing
- Study required
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