Incentives

Sales and Use Tax Exemptions, Refunds and Discounts

  • Sales and use tax is waived, refunded or discounted for qualifying business activities.
  • Data Center/Software Exemptions:
    • Machinery and equipment located and used in a data center are exempt from sales and use tax but are subject to a privilege tax.
    • The privilege rate is 1% with a maximum of $80 per article.
    • Sales of electricity for a qualified data center are exempt from sales and use tax.
    • Sales of computer software for use at a data center are exempt from sales and use tax.
    • Minimum capital investment of $150 million for a facility located in a Tier 1 county and/or Port Enhancement Zone.
    • Minimum capital investment of $225 million in a Tier 2 or 3 county.
    • Wage standards for Tier 1, 2 and 3 counties apply (see Article 3J Tax Credits for wage standards)
  • Manufacturing Exemptions:
    • Mill machinery and parts are exempt from sales and use tax but are subject to a privilege tax.
    • The privilege tax rate is 1% with a maximum of $80 per article.
    • Purchases of ingredients or component parts of a manufactured product are exempt from sales and use tax.
    • Packaged items that constitute a part of the sale and delivered with the product are exempt from sales and use tax.
    • Fuel and electricity for a manufacturing facility are exempt from sales and use tax.
  • Special Exemptions:
    • Piped natural gas is exempt from sales and use tax but is subject to an excise tax based on number of therms consumed.
    • Motor vehicles are exempt from sales and use tax but are subject to highway use tax.
  • Refunds:
    • Annual refund of sales and use tax applies to purchases of building materials, fixtures and equipment if the facility costs less than $50 million in a Tier 1 county.
    • Annual refund of sales and use tax applies to purchases of building materials, fixtures and equipment if the facility costs less than $100 million in a Tier 2 or 3 county.
    • Testing labs or medical labs are eligible for a 50% refund on sales and use tax of supplies for analytic activities.
  • Discounts:
    • Aircraft and boats are taxed at 3% up to a maximum of $1,500 per item.