We have great news for manufacturers in Illinois! There has been a longstanding sales tax exemption for machinery and equipment that is used primarily in the manufacturing of tangible personal property. However, until recently, the exemption did not apply to consumables, hand tools, safety apparel, or other supplies. Recent tax legislation has now expanded the manufacturing sales tax exemption in Illinois. For purchases made on or after July 1, 2019, any production-related, tangible personal property used or consumed in the manufacturing process qualifies for the sales tax exemption.
Here are a few examples of supplies that are included in this new tax law:
- Tangible personal property incorporated into a manufacturing facility for use in a production related process;
- Tangible personal property primarily used or consumed in activities such as research and development, preproduction material handling, receiving and quality control, storage, packing, and shipping;
- Supplies and consumables primarily used in a manufacturing process, including fuels, coolants, solvents, oils, lubricants, and adhesives, hand tools, protective apparel, and fire and safety equipment.
To receive the exemption, you must prepare Form ST-587, Exemption Certificate (for Manufacturing, Production Agriculture, and Coal and Aggregate Mining), and provide the certificate to the retailer selling the related tangible personal property.
For more information on the exemption, click here. If you have any questions about whether your company’s purchases qualify for this sales tax exemption, please don’t hesitate to contact Cray Kaiser today.