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Last Updated: 7/12/2016

What qualifies for the Capital Equipment Refund?

Note: On July 1, 2015, Minnesota changed to an up-front sales tax exemption on eligible capital equipment purchases.

For purchases beginning July 1, 2015, you will receive an exemption by completing Form ST3, Certificate of Exemption at the time of purchase. If you pay sales tax after that date, you can still request a refund.

Businesses that buy or lease “capital equipment” for use in Minnesota can request a refund of sales or use tax they paid on qualifying purchases. Use Form ST11, Sales and Use Tax Refund Request and Multiple Period Amended Return to file a request.

To qualify for this refund, the equipment must be used for one of the following:

  • To manufacture, fabricate, mine or refine products that are ultimately sold at retail

  • To electronically transmit information sold to retail customers from an online database

  • To generate electricity or steam to sell at retail

Specific examples include:

  • Machinery and equipment used to operate, control or regulate the production equipment

  • Machinery and equipment used for research and development, design, quality control and testing activities

  • Environmental control devices that regulate temperature, humidity, light or air pressure when those conditions are essential to and are part of the production process

  • Materials and supplies used to construct and install machinery or equipment

  • Repair and replacement parts for qualifying equipment

  • Delivery and installation charges for qualifying equipment

  • Materials used for foundations that support machinery or equipment

  • Materials used to construct and install a special-purpose building used in the production process

  • Ready-mixed concrete trucks where the concrete is mixed as part of the delivery process

What doesn’t qualify?

The following types of material and equipment are not considered “capital equipment” and do not qualify for this refund:

  • Farm machinery, logging equipment or and equipment used in fish farming (“aquaculture”)

  • Motor vehicles for road use

  • Building materials that aren’t essential to and part of the production process

  • Machinery or equipment used to receive or store raw materials

  • Machinery or equipment used in the transportation, transmission or distribution of petroleum, liquefied gas, natural gas, steam or water through pipes, lines, tanks or mains

  • Telecommunications equipment and parts used to provide telecommunications services

  • Food preparation equipment

  • Machinery or equipment used to provide:

    • Laundry and dry cleaning services

    • Motor vehicle washing, waxing and cleaning services

    • Building and residential cleaning, maintenance, and disinfecting and exterminating services

    • Detective, security, burglar, fire alarm and armored car services

    • Pet care and grooming services

    • Lawn care, fertilizing, and other landscaping services

  • Any other machinery or equipment that is not used in or essential to the production process

For more information, see:

Fact Sheet 103, Capital Equipment

Fact Sheet 145, Industrial Production

  Capital Equipment Refund