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Capital Equipment Exemption
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The capital equipment exemption is an up-front sales tax exemption on eligible capital equipment purchases. To claim the exemption, give your vendor a completed Form ST3, Certificate of Exemption. Specify the Capital equipment exemption.
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To qualify for the exemption, 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
Examples:
- 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
The following types of material and equipment are not considered capital equipment:
- Farm machinery, logging equipment, or equipment used in aquaculture
- Motor vehicles for road use
- General building materials
- 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
- Other machinery or equipment that is not essential or used in the production process
For More Information
See the following fact sheets:
