Sales

If you sell taxable items, you must charge sales tax unless an exemption applies. If the item qualifies for an exemption, the purchaser must give you a completed Form ST3, Certificate of Exemption.

Taxable Sales

• Animals sold as farm-working stock, including mules, oxen, and herd dogs
• Animals sold as pets or to breed pets
• Hay bales to a contractor for erosion control
• Manure for purchasers to use on their lawns or gardens (flower, vegetable)
• Plants and seeds sold to purchasers for home vegetable gardens, lawns, or flower beds
• Plants, trees, and sod sold to person installing into real property

Nontaxable Sales

• Feed for agricultural animals, including pets raised for sale, farm-working stock, and breeding stock
• Grain sold as feed to other agricultural producers
• Produce such as eggs, honey, fruits, and vegetables

Prepared Food Sales

Prepared food is taxable. Common prepared food items in the agricultural industry result when a seller creates a single item for sale by adding two or more ingredients together. The combining or mixing may occur at premises other than the location where the sale is made. 

For example, a dairy making cheese that they sell directly to the public. These sales are taxable. 

For more information, see Prepared Food.

Equipment Sales

If you sell items that do not qualify for the farm machinery exemption, the sale is taxable. Examples include:

• Fencing
• Grain bins
• Hand tools
• Snow blowers

For more information, see Machinery and Equipment.

Farm Auctions

Farm auctions are exempt from tax. A farm auction is a public auction conducted by a licensed auctioneer. Substantially all the property sold at a farm auction consists of property used in the trade or business of farming and nonbusiness property such as household goods.

For more information, see Isolated and Occasional Sales.

Rentals and Leases

If you rent or lease farm machinery, the payments are not taxable. The purchaser or lessee must give you a completed Form ST3, Certificate of Exemption.

Note: The rental or lease payments are taxable if the machine or implement:

• Does not meet the definition of farm machinery in state law
• Is rented to a contractor or others for nonagricultural use

For more information, see Machinery and Equipment.

Charging Sales Tax

When you sell a taxable item, you must charge the state general sales tax and any local sales taxes that apply. Calculate tax based on the taxable sales price of the item (including any delivery charges).

Local Sales Tax