Utilities consumed in the state of New York are generally subject to sales and use tax. However, there are several utility uses that qualify for New York sales tax exemptions. In New York, utilities include purchases of gas, electricity, refrigeration and steam. Below are discussions of some of the more common exemptions for utilities in the state of New York.
Fuel and Utilities Used in Manufacturing or Processing
Utilities, including fuel, gas, and electricity, sold to manufacturers within the state of New York are completely exempt from sales tax if they are directly and exclusively used in production. The state of New York determines that a utility is used directly in production if it is either used to operate tax exempt equipment or machinery, used to create conditions necessary or required for production, or perform an actual step or part of the manufacturing or production process. A utility is used exclusively in production if it is 100% used in the production process.
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