Alabama Sales Tax Exemptions

Alabama levies a 4% state sales tax on all purchases of tangible personal property unless the transaction is specifically exempted. There are more than 200 city and county sales taxes imposed in addition to the 4% state sales tax rate. Alabama’s range of sales tax rates is between 4% and 11%.

The consumer’s use tax is imposed on tangible personal property brought into Alabama for storage, use, or consumption in the state when the seller did not collect seller’s use tax on the sale of the property. The tax rates due are the same rates as for sales tax. Returns are to be filed on or before the 20th day of the month following the month in which the purchases were made. For example, purchases made in the month of January should be reported to the state of Alabama on or before February 20th. For more information on Alabama sales tax exemptions visit
https://www.revenue.alabama.gov/sales-use/sales-tax/

Alaska Sales Tax Exemptions

The state of Alaska is one of five states in the U.S. that does not charge a state sales tax. At the local level over 100 municipalities do collect a sales tax, with rates ranging between 1% to 7.5%. For more information on Alaska sales tax exemptions please visit  http://www.tax.alaska.gov/programs/programs/index.aspx?10002

Arizona Sales Tax Exemptions

The state of Arizona levies a Transaction Privilege Tax, which is similar to sales tax in other states. The state rate is 5.6% and is levied on all purchases of tangible personal property unless specifically exempted. All Arizona counties collect an additional tax ranging between 1-5.3%.

Use tax is imposed on tangible personal property brought into Arizona for storage, use, or consumption in the state when the seller did not collect tax on the sale of the property. The tax rates due are the same rates as for sales tax. Returns are to be filed on or before the 20th day of the month following the month in which the purchases were made. For example, purchases made in the month of January should be reported to the state of Arizona on or before February 20th. For more information on Arizona sales tax exemptions visit  https://azdor.gov/transaction-privilege-tax-tpt

Arkansas Sales Tax Exemptions

The state of Arkansas levies a 6.5% state gross receipts tax, which is similar to sales tax. There are more than 300 local jurisdictions that collect their own sales tax in addition to the state rate, up to an additional 5.125%.

Use tax is imposed on tangible personal property brought into Arkansas for storage, use, or consumption in the state when the seller did not collect seller’s use tax on the sale of the property. The tax rates due are the same rates as for sales tax.

Returns are to be filed on or before the 20th day of the month following the month in which the purchases were made. For example, purchases made in the month of February should be reported to the state of Arkansas on or before March 20th.

Visit https://www.dfa.arkansas.gov/excise-tax/sales-and-use-tax

California Sales Tax Exemptions

The state of California currently levies a 7.25% state sales tax rate. Between January 1, 2013 and December 31, 2016 the state sales tax rate was 7.5%. The reduction to the current 7.25% rate took effect on January 1, 2017. The temporary 4-year increase in the state sales tax rate was a result of the increase passed under Proposition 30 which was on the November 6, 2012 ballot for California votes. The initiative was approved by 55.4% of voters. See below for more detailed information about relevant California sales tax exemptions and use tax.

Counties & local municipalities also levy their own sales taxes in addition to the state rate. Currently, California’s combined sales tax rates range between 7.25% and 9.75%. The combined rate includes state, district, county and city sales tax.

Use tax is applied on the same basis and at the same rates as sales tax is within the state of California. For monthly-filers, returns are due on or before the last day of the month following the month in which the purchases were made. For example, purchases made in the month of January should be filed with the state of California on or before the last day of February.

Effective July 1, 2014, the state of enacted a new California sales and use tax exemption for purchases of manufacturing machinery and equipment as well as research and development (R&D) equipment. The exemption is currently in place between 7/1/2014 and 6/30/2022. This is a partial sales and use tax exemption from the state rate, not a complete exemption.

One other prominent exemption for the manufacturing industry is for items consumed in the production process that become an ingredient or component part of the final product. Other than these two exemptions, there are few other California sales tax exemptions for the manufacturing industry.

As a result of the Court of Appeal’s decision in Nortel Networks, Inc. v. State Board of Equalization (2011) the purchases of many non-custom software programs are not subject to California sales tax. Most off-the-shelf or boxed software will not qualify for the exemption because the seller must hold the patent or copyright or licensing interests. Qualifying purchases are designated as Software Technology Transfer Agreements or TTA’s.

The agriculture industry also enjoys partial California sales tax exemptions. Purchases of specific farm machinery and equipment for businesses classified under North American Industry Classification System (NAICS) codes 0111 to 0291 qualify under this exemption. There is a broad list of items qualifying for this partial exemption.

Visit https://www.boe.ca.gov/serp.htm?q=sales+ta+exemptions

Colorado Sales Tax Exemptions

The state of Colorado levies a 2.9% state sales tax rate on retail sales. Most counties and cities charge their own sales taxes in addition to the state rate.  However, within Colorado, the range of sales tax charged ranges from 2.9% to 8.0%.

Use tax is due on all purchases brought into the state of Colorado. Use tax due is at the same rates as sales tax. Returns are to be filed on or before the 20th day of the month following the month in which the purchases were made. For example, purchases made in the month of January should be reported to the state of Colorado on or before February 20th. For more information on Colorado sales tax exemptions, visit https://tax.colorado.gov/

Connecticut Sales Tax Exemptions

Beginning on the July 1st, 2011, the state of Connecticut levies a 6.35% state sales tax on the retail sale, lease or rental of most goods. No local jurisdictions apply an additional sales tax, therefore the state rate is fixed at 6.35%.

Use tax is due on items purchased outside of the state and brought into Connecticut for use, storage or consumption. The same 6% rate applies to use tax as well. In general, when you register your business with the state of Connecticut, you will be set up to file sales tax returns on a quarterly basis. If your sales tax liability is more than $4,000 for the prior 12-month period, beginning July 1 and ending June 30, your filing status will be changed to monthly. Monthly returns are to be filed on or before the last day of the month following the month in which the purchases were made. For example, purchases made in the month of January should be filed with the state of Connecticut on or before the last day of February.

For more information, visit https://portal.ct.gov/DRS/Businesses/New-Business-Portal/Managing-Sales-Tax

Delaware Sales Tax Exemptions

The state of Delaware is one of five states in the U.S. that does not charge a state sales tax.

Florida Sales Tax Exemptions

The state of Florida levies a 6% state sales tax rate on the retail sale, lease or rental of most goods. Counties impose their own additional surtaxes. The range of sales tax rates charged within the state of Florida is between 6% and 7.5%. Florida’s county surtax rates are capped on purchases over $5,000, which is different from other states. For example, if you purchased a motor vehicle with the purchase price of $20,000 in a county with a 1% surtax rate, 7% tax would be due on the first $5,000 of the purchase price and 6% tax would be due on the remaining $15,000 of the purchase price.

Use tax is due on all purchases brought into the state of Florida, unless specifically exempted. Use tax is due at the same rates as sales tax. Returns are to be filed on or before the 20th day of the month following the month in which the purchases were made. For example, purchases made in the month of July should be reported to the state of Florida on or before August 20th. For more information visit https://floridarevenue.com/taxes/taxesfees/Pages/sales_tax.aspx

Georgia Sales Tax Exemptions

The state of Georgia levies a 4% state sales tax rate on the retail sale, lease or rental of most goods. Local jurisdictions impose additional sales taxes up to 4%. The sales tax rates in the state of Georgia are within the 4% to 8% range.

Use tax is due on all purchases brought into the state of Georgia, unless specifically exempted. Use tax is due at the same rates as sales tax. Returns are to be filed on or before the 20th day of the month following the month in which the purchases were made. For example, purchases made in the month of January should be reported to the state of Georgia on or before February 20th.

Visit https://dor.georgia.gov/taxes/business-taxes/sales-use-tax

Hawaii Sales Tax Exemptions

In lieu of a sales tax, the state of Hawaii collects a 4% general excise tax, which is assessed on the retail sale, lease or rental of most goods. Oahu charges an additional 0.5% surtax.

Use tax is charged on the purchase price or value of tangible personal property purchased or imported, whichever is applicable. Depending on the use the rates are different. The rate is 0.5%, if the item is for resale at retail. The rate is 4%, if the item is for use or consumption. Use tax is applied on the same basis as general excise tax is within the state of Hawaii. If you are required to file a return on a monthly basis, returns are to be filed on or before the last day of the month following the month in which the purchases were made. For example, purchases made in the month of January should be filed with the state of Hawaii on or before the last day of February. Visit https://tax.hawaii.gov/

Idaho Sales Tax Exemptions

The state of Idaho levies a 6% state sales tax on the retail sale, lease or rental of most goods and some services. Several local jurisdictions impose additional sales taxes up to an additional 3%.

Use tax is also collected on the consumption, use or storage of goods in Idaho if sales tax was not paid on the purchase of the goods. The use tax rate is the same as the sales tax rate. Returns are to be filed on or before the 20th day of the month following the month in which the purchases were made. For example, purchases made in the month of January should be reported to the state of Idaho on or before February 20th.

Visit https://tax.idaho.gov/i-1023.cfm

Illinois Sales Tax Exemptions

The state of Illinois levies a 6.25% state sales tax on the retail sale, lease or rental of most goods and some services. Local jurisdictions impose additional sales taxes ranging between 0.25% and 4.75%. The range of total sales tax rates within the state fluctuates between 6.25% and 11%.

Use tax is also collected on the consumption, use, or storage of goods in Illinois if sales tax was not paid on the purchased goods. The use tax rate is the same as the sales tax rate. Returns are to be filed on or before the 20th day of the month following the month in which the purchases were made. For example, purchases made in the month of January should be reported to the state of Illinois on or before February 20th.

Visit https://www2.illinois.gov/rev/Pages/default.aspx

Indiana Sales Tax Exemptions

As of April 2008, the state of Indiana levies a 7% state sales tax on the retail sale, lease or rental of most goods and some services. No additional local taxes are collected within the state of Indiana.

Use tax is also collected on the consumption, use or storage of goods in Indiana if sales tax was not paid on the purchase of the goods. The use tax rate is the same as the sales tax rate. Returns are to be filed on or before the 20th day of the month following the month in which the purchases were made. For example, purchases made in the month of January should be reported to the state of Indiana on or before February 20th.

Visit https://www.in.gov/dor/business-tax/sales-tax/

Iowa Sales Tax Exemptions

The rate of Iowa’s state sales tax increased to 6% beginning July 1, 2008. Sales tax is due on the retail sale, lease or rental of most goods and some services. Local jurisdictions may impose an additional local option tax of 1%.

Use tax is also collected on the consumption, use, or storage of goods in Iowa if sales tax was not paid on the purchase of the goods. The use tax rate is the same as the general sales tax rate. Returns are to be filed on or before the 20th day of the month following the month in which the purchases were made. For example, purchases made in the month of January should be reported to the state of Iowa on or before February 20th.

Visit https://tax.iowa.gov/search-results?q=sales%20tax%20exemptions

Kansas Sales Tax Exemptions

The state of Kansas levies a 6.5% state sales tax on the retail sale, lease or rental of most goods and some services. Local jurisdictions impose additional sales taxes up to 4%. The range of total sales tax rates within the state of Kansas is between 6.5% and 10.5%.

Use tax is also collected on the consumption, use or storage of goods in Kansas if sales tax was not paid on the purchase of the goods. The use tax rate is the same as the sales tax rate. Returns are to be filed on or before the 25th day of the month following the month in which the purchases were made. For example, purchases made in the month of January should be reported to the state of Kansas on or before February 25th.

Visit https://www.ksrevenue.gov/bustaxtypessales.html

Kentucky Sales Tax Exemptions

The state of Kentucky levies a 6% state sales tax on the retail sale, lease or rental of most goods and some services. There are no local sales taxes in the state of Kentucky, and as a result, there are no direct Kentucky sales tax exemptions.

Use tax is also collected on the consumption, use or storage of goods in Kentucky if sales tax was not paid on the purchase of the goods. The use tax rate is the same as the sales tax rate. Returns are to be filed on or before the 20th day of the month following the month in which the purchases were made. For example, purchases made in the month of January should be reported to the state of Kentucky on or before February 20th.

Visit https://revenue.ky.gov/Business/Sales-Use-Tax/Pages/default.aspx

Louisiana Sales Tax Exemptions

Beginning on April 1, 2016 the state of Louisiana levies a 5% state sales tax on the retail sale, lease or rental of most goods and some services. Local jurisdictions impose additional sales taxes up to 7%. Prior to the 1% increase in the state rate which took place on April 1, 2016 the state rate was 4%. The current range of total sales tax rates within the state of Louisiana is between 5% and 12%.

Use tax is also collected on the consumption, use, or storage of goods in Louisiana if sales tax was not paid on the purchase of the goods. The use tax rate of 8%, which includes 4% to be distributed by the Department of Revenue to local governments. The use tax rate is 8% regardless of whether the actual combined state and local rate in your area is equal to, higher than, or lower than 8%. The use tax is paid in lieu of the actual local rate in effect. Returns are to be filed on or before the 20th day of the month following the month in which the purchases were made. For example, purchases made in the month of January should be reported to the state of Louisiana on or before February 20th.

Visit http://www.rev.state.la.us/SalesTax/GeneralSalesAndUseTax

Maine Sales Tax Exemptions

Aaron Giles

Aaron C. Giles is the Founder and President of Agile Consulting Group. Aaron spent five years working within the specialty niche of Sales & Use Tax at Brown & Associates before forming his own firm in 2005. He has worked hundreds of audits in states all across the U.S. during that time and has delivered savings of over $75M in the form of refunds and credits to his clients. Today, he leads a group of talented, detail-oriented colleagues who focus exclusively on Sales & Use Tax.

Some of our firms’ greatest achievements have come in successfully arguing new and unique perspectives to existing tax law in various states enabling our clients to claim exemptions on categories of purchases previously held to be taxable. Included in these victories are: communication services taxes for religious nonprofit hospitals in FL, bulk purchases of drugs in VA, specific surgical tools and instruments for healthcare providers in TX, printing plates in GA, railroad utilities in KY, and most recently software in AL.