Sales & Use Tax Exemptions for Utah Manufacturers
Last Updated on March 25, 2026
Utah provides several sales & use tax exemptions that can lower the tax burden for manufacturers. Most opportunities fall into three main categories:
- Manufacturing facility exemption (machinery, equipment, parts, and some materials)
- Utilities used in production (electricity and natural gas)
- Resale and component parts
1. Manufacturing Facility Exemption
This exemption generally applies to production machinery and equipment used in the actual manufacturing process, including scrap recycling/cogeneration. Common examples include:
- Presses and stamping equipment
- CNC machines
- Production lines and conveyors
- Production-related controls and automation equipment
Utah also commonly allows the exemption for:
- Normal operating repair and replacement parts
- Certain materials used or consumed during manufacturing
- No “1-year useful life” rule for repair/replacement parts (some states require that—Utah generally does not)
What usually does not qualify
- Office equipment and supplies (computers for admin staff, office furniture, printers, etc.)
- Safety gear/PPE (Utah typically treats items like gloves, safety glasses, hard hats, and similar gear as taxable business supplies.)
2. Electricity/Gas used in Production
Statutory exemptions can apply to sales of natural gas, electricity, heat, coal, fuel oil, and other fuels when purchased for industrial use, which is often relevant for plants with energy-intensive processes such as metal fabrication, plastics, food processing, or chemical production.
Utah employs a predominant use rule, meaning any applicable usage of utilities used in production over 50% makes the entire utility bill exempt from sales tax. To qualify for the exemption, a predominant use study may need to be completed to show the distinction between energy used for production vs. non-production. If production usage is over 50%, the taxpayer qualifies.
One nuance: Even if the utility qualifies for a sales tax exemption, Utah’s municipal energy taxes may still apply because they operate separately from the sales tax system.
3. Resale and Component Parts
Even when a purchase doesn’t fit neatly into a manufacturing exemption, Utah’s general rules can still provide relief in two common situations:
- Resale: Items purchased strictly for resale can be exempt when properly documented
- Component parts: Materials that become a physical part of the final product sold as tangible personal property may qualify under component-part principles
This often applies to items like:
- Raw materials and ingredients
- Packaging that becomes part of the product sold
- Items physically incorporated into the finished goods
Utah Sales & Use Tax Recovery (Refund Opportunities)
If a Utah manufacturer overpaid sales tax or over-accrued use tax, Utah provides a 3-year window to pursue refunds.
How refund claims are usually handled
- Refund requests generally start with the vendor that charged the tax.
- The vendor may issue a credit/refund or may direct the taxpayer to pursue relief through the state.
Most states require strong proof of payment (cancelled checks, bank records, etc.). Utah allows the vendor to fill out a form called the Sellers Statement of Payment of Taxes. Submission of this form will satisfy the state’s POP requirement.
Utah generally has 90 days to act on a refund request before interest begins accruing on the claim amount.
About TaxMatrix
Celebrating our 26th year in business, TaxMatrix is a leading sales & use tax recovery and audit defense firm. We work extensively in Utah with manufacturers and pharmaceutical/biotech companies.
If you’d like to learn more about our success-based sales & use tax recovery process, contact us.
