Missouri Manufacturing Local Sales Tax Change

Last Updated on January 5, 2023

As of January 1, 2023, manufacturing exemptions under Section 114.054, RSMo, apply to state sales and use tax, and local sales and use tax. Prior to this date, only the local sales tax would apply on otherwise state-exempt manufacturing purchases.

Manufacturing Local Sales Tax Exemption Requirements

To qualify for the exemption, the purchased item must be used or consumed. Missouri manufacturers can now save 3.719% (average local sales tax) on the purchases in Section 114.054, RSMo, as defined as:

Research and Development

Research and development related to manufacturing, processing, compounding or producing a product.

Manufacturing Chemicals and Materials

Chemicals or materials used or consumed in manufacturing, processing, compounding or producing a product.

Machinery and Equipment Used or Consumed in Manufacturing

Machinery or equipment used or consumed in manufacturing, processing, compounding or producing a product. To qualify, the product must ultimately be subject to sales or use tax, or its equivalent, in Missouri or other states.

Materials, Chemicals, Machinery, and Equipment Used or Consumed in Material Recovery Processing Plant

Material recovery processing. This exemption includes machinery and equipment used to establish new or to replace existing material recovery processing plants.

Utilities or Energy and Water Used or Consumed in Manufacturing

If claiming utilities (electrical energy, gas or water), record account numbers, meter numbers, or other information as required by the vendor. All purchasers who are claiming an exemption for energy use must provide the amount of energy use which is related to manufacturing in the space provided and also select the method by which this percentage was obtained.

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