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Manufacturing Exemptions

Manufacturing Exemptions

State sales and use tax exemptions are available to taxpayers who manufacture, fabricate or process tangible personal property for sale.

Texas sales and use tax exempts tangible personal property that becomes an ingredient or component of an item manufactured for sale, as well as taxable services performed on a manufactured product to make it more marketable.

The exemption also applies to tangible personal property that makes a chemical or physical change in the product being manufactured and is necessary and essential in the manufacturing process

Who can get the exemption?

To qualify for a manufacturing exemption, the taxpayer must manufacture, fabricate or process tangible personal property for sale; repair tangible personal property from their own inventory for sale (rebuilders); or repair tangible personal property from their own inventory for rental.

What is exempt?

The manufacturing exemption applies to machinery or equipment that causes a physical or chemical change in a product in order to make it saleable.

For more information, visit:  http://comptroller.texas.gov/taxinfo/taxpubs/tx94_124.html