Exemption for Manufacturing Machinery and Equipment
Manufacturing machinery and equipment that is integral and necessary to the manufacturing process and used in a manufacturing facility located in Georgia is exempt from sales tax.
Qualifying machinery or equipment must be purchased for one of the following purposes:
- For a new manufacturing facility
- As replacement machinery in an existing manufacturing facility
- For the upgrade or expansion of an existing manufacturing facility
Exemption for Repair Parts and Tooling
The sale or use of the following items necessary and integral to manufacturing tangible personal property in an existing manufacturing plant is exempt from taxation:
- Repair or replacement parts
- Machinery clothing
- Molds
- Dies
- Waxes
- Tooling for machinery
Exemption for Certain Materials
The following materials may be purchased tax-free:
- Materials used for further processing, manufacture, or conversion into components of a finished product
- Materials coated upon or impregnated into a product being manufactured for sale
- Non-reusable materials used to package products for sale or shipment
Exemption for Energy Used in Manufacturing
The sale, use, storage, or consumption of energy necessary and integral to the manufacture of tangible personal property at a manufacturing plant in Georgia shall be exempt from all sales and use taxation except for the sales and use tax for educational purposes.
This exemption includes energy used directly or indirectly in a manufacturing facility.
Implementation Schedule for Exemption:
- 25% phased-in each year beginning on January 1, 2013
- Reaching 100% exemption on January 1, 2016
Exemption for Machinery and Equipment in Distribution Facilities
Machinery and equipment used to handle, move, or store tangible personal property in a new or expanded distribution or warehouse facility is exempt, provided:
- The total purchase or expansion is valued at $5 million or more
- The distribution or warehouse facility does not have retail sales equal to or greater than 15% of the facility’s total revenues
Frequently Asked Questions
What types of manufacturing machinery and equipment qualify for Georgia’s sales tax exemption?
To qualify, machinery or equipment must be integral and necessary to the manufacturing process and used in a manufacturing facility in Georgia. Eligible uses include new facilities, replacements in existing facilities, and upgrades or expansions.
Are repair parts and tooling used in manufacturing also exempt from sales tax?
Yes, Georgia exempts sales tax on repair or replacement parts, machinery clothing, molds, dies, waxes, and tooling when these items are necessary and integral to the manufacturing of tangible personal property.
What materials can be purchased tax-free for manufacturing purposes?
Materials used in further processing, converted into components, impregnated into a product, or used for non-reusable packaging may be purchased without paying sales tax.
Does the energy used in manufacturing qualify for sales tax exemption in Georgia?
Yes, energy used directly or indirectly in manufacturing tangible personal property is exempt from sales and use tax, except for the portion earmarked for educational purposes.
Is equipment used in distribution or warehouse facilities eligible for exemption?
Yes, machinery and equipment for handling, moving, or storing tangible personal property are exempt, provided the facility’s total investment is $5 million or more and retail sales are less than 15% of total revenues.