Overview
Tennessee Department of Revenue has advised that as a result of L. 2022, S905, beginning January 1, 2023, qualified farmers and nursery operators may purchase certain items exempt from sales and use tax.
These exempt purchases include:
- Building materials
- Fencing materials
- Warranties
- Most other items of tangible personal property used primarily (more than 50%) in agricultural operations
Exclusions from the Exemption
The following items are not included in this exemption:
- Automobiles
- Trucks
- Household appliances
- Gasoline or diesel fuel used in vehicles operated upon public highways
Definition of Agricultural Operations
Agricultural operations refer to:
- Land, buildings, and machinery used in the commercial production of farm products and nursery stock
- Activities carried on in connection with the commercial production of farm products and nursery stock
This exemption aims to support the agricultural industry by reducing tax burdens on necessary materials and property directly connected to farming and nursery businesses.
Frequently Asked Questions
Who qualifies for the Tennessee sales tax exemption on agricultural items?
Qualified farmers and nursery operators who are engaged in commercial agricultural operations are eligible for the exemption. They must be using the purchased items primarily (over 50%) in their agricultural business.
What types of items are included in the exemption?
Exempt items include building materials, fencing, warranties, and most tangible personal property that is used primarily in agricultural operations. The exemption supports materials directly tied to farming or nursery use.
Are vehicles like trucks and automobiles eligible for the exemption?
No, automobiles and trucks are explicitly excluded from the sales tax exemption, even if they are used on a farm. This also includes any fuel used in vehicles on public highways.
How is “agricultural operations” defined under this exemption?
Agricultural operations refer to the commercial production of farm products and nursery stock, including land, buildings, machinery, and associated activities used in that production.
When did the sales tax exemption for agricultural items take effect?
The exemption took effect on January 1, 2023, following the enactment of legislation L. 2022, S905 by the Tennessee Department of Revenue.