Several terms in manufacturing are key to understanding how sales tax impacts this industry. First is the definition of the industry itself.
Ohio, for example, says “a manufacturer must be changing the state or form of a material in order to sell it.” Texas grants exemptions for TPP that’s an ingredient or component of an item manufactured for sale; TPP that makes a chemical or physical change in the manufactured product and is essential in the manufacturing process (though not hand tools); and taxable services performed on a manufactured product to make it more marketable.
(“Services” is a whole other area of sales tax evolution, including services performed for manufacturing.)
Source: taxconnex.com
