Sales Tax Information for Farmers, Manufacturers

Minnesota Statute 297A.25, Subd. 9, provides a sales tax exemption for utilities consumed in agricultural or industrial production. The exemption does not apply to service businesses or restaurants.

Utilities, such as electricity, used by industries to produce items that are ultimately sold at retail are exempt from sales tax if the utilities are used directly in the production process. The exemption does not include utilities used for space heat and lighting of the production area, or of office, administration, or other non-production areas.

To claim the exemption, you must provide the utility a completed Form ST-3, Exemption Certificate.

If your production and non-production equipment are not metered separately, you will need to do an energy study to determine the percentage of exempt utility usage. Sales Tax Fact Sheet 129, Utilities Used in Production briefly outlines how each type of energy study is done. It is designed to help you choose an appropriate method.
Forms and Fact sheets are available from your Cooperative at 888-847-8840, from the MN Dept. of Revenue at 800-657-3777, or by clicking the links below.

Form ST-3 is included in the Minnesota Sales & Use Tax Instruction Booklet (Adobe Acrobat Reader is needed to view the Minnesota Sales & Use Tax Instruction Booklet.)

Sales Tax Fact Sheets:

100 Agricultural Production

129 Utilities Used in Production

145 Industrial Production.

(Adobe Acrobat Reader is needed to view these Fact Sheets.)