Two main tax exemption approaches:
-
- Integrated plant theory (broader exemptions)
- Direct use theory (narrower, focused on equipment directly causing physical/chemical changes)
Important Insights:
- Not all manufacturing equipment automatically qualifies for tax exemption
- Rules vary significantly by state (e.g., Texas uses direct use theory)
- Additional savings opportunities exist through repair service exemptions
- Common misconception: assuming blanket exemption for all facility equipment
- Items like forklifts and conveyors may or may not qualify based on state rules
Best Practices:
- Consult tax advisors before major purchases
- Understand state-specific regulations
- Avoid overusing exemptions to prevent audit penalties
- Review lesser-known exemption opportunities
Source: weaver.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
