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- UTILITY SALES TAX EXEMPTION
- Utility Sales Tax Exemption
State legislation that exempts qualifying manufacturers and processors from
sales tax on utilities used in production.
State legislation that exempts qualifying manufacturers and processors from sales tax on utilities used in production.
- Overview
In 32 states, when utilities are considered “necessary and integral to production,” a company does not have to pay sales tax on those utilities. The utility sales tax exemption is state legislation used as an economic incentive to encourage manufacturing and production within the state. Manufacturers are entitled to this exemption, and it could save your company substantial tax dollars moving forward. Qualifying utilities include electric, natural gas, water, steam, and industrial gases. Align specializes in obtaining utility sales tax exemptions and refunds, and our process is straightforward and requires minimal involvement from your team. We do the work, you benefit.
- Does Your State Qualify?
Hover or tap any state to see how its exemption works. Amber states currently have utility sales tax exemption legislation for qualifying production use. Rules shown are general and simplified; exact thresholds and documentation requirements vary and should be confirmed for your specific facility.
Utility sales tax exemption studies completed for clients
nationwide
Estimate Savings
Our energy consultant team quickly provides an estimate of tax savings based on a few of your utility bills.
Engineering Study
We tour your facility, and through our engineering study determine what portion of production qualifies for an exemption.
Submit Forms
Align submits all state-required exemption forms and works directly with the state for any questions or in the case of an audit.
Save Money
Once approved, your business reduces or eliminates monthly utility sales tax payments. In many states, this is a permanent exemption.
- Recent Results
- Northwest Indiana
- 30 electric, gas & water meters
Dairy farm, 50,000+ head of cattle
$750,000
refund on prior taxes
$250,000
ongoing annual savings
- Northwest Indiana
- 2 electric, 2 gas meters
Global auto parts manufacturer, structural & suspension components
$135,000
refund on prior taxes
$55,000
ongoing annual savings
View 4 more case studies
- 2 electric meters
Auto parts manufacturer, seats for Subaru vehicles
$220,000
refund on prior taxes
$75,000
ongoing annual savings
National restaurant group, hundreds of locations
$400,000
refund on prior taxes
$150,000
ongoing annual savings
- Port of Indiana
- 2 large electric meters
Bulk liquid & oil terminal, fertilizer & liquid commodity blending
$115,000
refund on prior taxes
$40,000
ongoing annual savings
- Large electric, gas & water meter
Global precision marine propeller manufacturer
$200,000
refund on prior taxes
$65,000
ongoing annual savings
- Watch & Learn
Quick Video Answer
Is this a one time refund or ongoing savings?
What does the study process look like?
What is the utility sales tax exemption?
How do I know if my facility qualifies?
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- FAQs
Answers to some of our most common questions
If your business manufactures, processes, or produces something and pays sales tax on the electricity, gas, or water used to do it, there’s a good chance you’re paying tax you don’t owe. Many states exempt the portion of utility usage tied directly to production, and claiming it requires a predominant use study documenting exactly how much of your usage goes toward production versus general business use.
If you manufacture, process, produce, or do agricultural or industrial work and pay sales tax on your utilities, it’s worth checking. The only way to know for certain is a predominant use study, an on-site engineering review of your specific facility, but a free feasibility review is the fastest way to get an honest answer.
Both. Most states allow a refund on sales tax already paid on qualifying usage, often looking back several years, and the exemption applies going forward too, so you generally stop paying that portion of the tax permanently once it’s in place.
We visit your facility, review your utility bills and equipment, and build a detailed engineering analysis mapping what percentage of usage goes toward qualifying production. That becomes a formal report we file with the state on your behalf, whether for the exemption certificate, the refund, or both. Most studies take weeks, not months.
Curious if Utility Sales Tax Exemption applies to you?
A short conversation tells us fast, and it’s free either way.