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Utility Exemption Studies

With rising energy costs, sales tax exemptions on the procurement and particular use of utilities (electricity, natural gas, steam and water) can provide a meaningful source of tax savings. To reduce and recover your utility costs through the reduction or elimination of sales tax, a predominant use study or utility exemption study is typically required to support the claim for relief. Many states allow for exemptions for manufacturing, R&D and commercial residential buildings, so you could be saving thousands of dollars a month if your business is exempt.

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Our value proposition includes:

  1. Review current utility invoices to determine if a sales tax exemption may be warranted given the state of operation and client’s business. 
  2. Clarify the production site(s), square footage, meter usage and the equipment.
  3. Conduct a facility tour with a licensed engineer to perform the study.
  4. Present the study to the client, along with recommendations on the exemption(s) in question and possible refunds of historical paid tax.

Pricing:

Our utility exemption studies are typically performed free-of-charge as part of a sales tax recovery exercise whereby the study is used to file a refund claim on prior sales tax paid on utilities used in the production process. However, stand-alone utility exemption studies are performed for a set fee.

Start Your Exemption Study Today

Contact us today for a FREE, NO OBLIGATION review of your electric, gas and water/sewer bills.

Qualified Industries with Utility Exemptions

Assembly & Auto Manufacturers Aviation & Aerospace Manufacturing
Bakeries Beverage & Bottling
Breweries Chemical Plants
Commercial Residential Concrete & Asphalt Plants
CNC & Lathe Shops Dairy Plants
Food Processing Foundries
Gas Pipeline Transportation High Tech Clean Rooms
Machine Shops Meat Processing
Media Printing Mining & Mineral Extraction

Identify Significant Tax Savings with A Predominate Use Study

A utility exemption study will help identify opportunities for tax savings and isolate areas of exposure, including:

  • Changes in business activity (up or down)
  • Re-metering within plants
  • Expansion/relocation of facilities
  • Changes in utility vendors due to deregulation
  • Acquisitions
  • Outsourced utility bill management
  • Erroneous vendor accounting systems

If you are interested in learning more about the impact a utility exemption study could have on your sales tax, get in touch today.

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Utility Exemptions by State

Want to know if your state has utility exemptions? Find your state below and contact us with questions!

Additionally, you can consult our State-By-State Sales Tax Map to see a comprehensive view of your state’s sales tax laws.

This state has no utility tax exemptions.

This state has no utility tax exemptions.

Beginning July 1, 2007, sales of natural gas and electricity to a manufacturer for use directly in the manufacturing process will be taxed as follows: From July 1, 2007 through June 30, 2008 the state tax rate will be four and one-half percent (4.5%). Beginning July 1, 2008, and continuing thereafter, the state tax rate will be four percent (4%).

Electricity is exempt.

Must apportion the exempt and non-exempt usage.

Full exemption if greater than 75%.

Predominant use (51% or more of utility used in manufacturing allows for 100% exemption).

75% - 100% exemption, less than 75%, but greater than 50% - 50% exemption,  less than 50%, no exemption.

Exempt if cost of electricity exceeds 50% of cost of all materials used in product, including electricity.

This state has no utility tax exemptions.

Electricity is exempt.

Electricity is exempt.

Exempt when greater than 50%.

Apportionment is required.

Apportionment is required.

Exempt if the cost of energy or fuel exceeds 3%.

This state has no utility tax exemptions.

95% of electricity is exempt for use at a manufacturing facility. 

Predominant use determines taxability. If greater than 50%, electricity is exempt.

Greater than 75% exempt.

Apportionment is required.

Apportionment is required.

This state has no utility tax exemptions.

Exempt if 10% of energy exceeds the total cost of production OR the actual percentage calculated. (Square footage may be used - see Comments)

Exempt if used 50% or more in manufacturing.

Gas, electricity and water, when delivered to consumers through mains/lines/pipes, are exempt.

This state has no utility tax exemptions.

*Sales tax is already included in the cost of the utility.

Apportionment is required.

Apportionment is required.

A "facility" is a single building or structure, or a group of buildings or structures that are located on a single parcel of land or on contiguous parcels of land under common ownership and any other related real property contained on the parcel or parcels. The exemption applies to electricity used both inside and outside the facility, including electricity used for parking lot lighting at the facility.

This state has no utility tax exemptions.

Apportionment is required.

Predominant use (51% or more of utility used in manufacturing allows for 100% exemption).

Apportionment is required.

Apportionment is required.

Apportionment is required.

This state has no utility tax exemptions.

This state has no utility tax exemptions.

Predominant use (51% or more of utility used in manufacturing allows for 100% exemption).

Predominant use (51% or more of utility used in manufacturing allows for 100% exemption).

Predominant use (51% or more of utility used in manufacturing allows for 100% exemption).

Predominant use (51% or more of utility used in manufacturing allows for 100% exemption).

This state has no utility tax exemptions.

Apportionment is required.

Apportionment is required.

Apportionment is required.

Additional Services

Are you looking for additional sales tax services from a tax consultant agency known for being transparent and thorough? View our Sales Tax Recovery and Sales Tax Audit Defense services now!