State & Local Tax Blog

Manufacturers in Missouri Take Note

New Sales Tax Exemption for Manufacturers

Governor Matt Blunt signed the bill June 13, 2007, saying, “Manufacturing is a vital part of our diverse economy, and this will help level the playing field for Missouri manufacturers.” Effective August 28, 2007, Senate Bill 30 exempts from state tax (4.225 percent) and local use tax, but not local sales tax: (note the exemption is for local use tax but not local sales tax)

  • Electrical energy
  • gas, whether natural, artificial, or propane
  • water
  • coal
  • energy sources
  • chemicals
  • machinery equipment
  • materials

All of the above may be exempt if they are:

  • used or consumed in the manufacturing, processing, compounding, mining, or producing of any product; or
  • used or consumed in the processing of recovered materials; or
  • used or consumed in research and development related to manufacturing, processing, compounding, mining, or producing any product.

Here’s some examples from the Missouri website of what activities do and do not constitute manufacturing:

Examples of Activities That Are Not “Manufacturing, Processing, Compounding,
Mining, or Producing a Product:”
A. Preparing a meal in a restaurant.
B. Constructing a road, building, or other fixed structure.
C. Florist activities.

Examples of Activities That Are “Manufacturing, Processing, Compounding,
Mining, or Producing a Product:”
A. Making cabinets and countertops.
B. Making modular homes.
C. Making pre-fabricated steel or concrete products.
D. Preparing framed photographs or pictures.
E. Testing of manufacturing equipment before it is installed.
F. Commercial printing.
G. Producing a wireless or landline based telephone call.
H. Bakeries.

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