Illinois Expands the Manufacturer’s Exemption

Posted: June 28, 2019 - Blog, State and Local Tax, Tax Planning & Tips

According to an article found on CCH IntelliConnect Tracker News, supplies and consumables used in manufacturing are exempt from Illinois sales and use tax beginning July 1, 2019. Recent tax legislation expands the manufacturing exemption to once again include production related tangible personal property.

Items Qualifying for the Manufacturing Exemption

Illinois gives manufacturers a sales tax exemption for purchases of machinery and equipment used in:

  • manufacturing; or
  • assembling.

The new tax law includes supplies and consumables in the definition of machinery and equipment for the exemption.

For example, in addition to supplies, manufacturers can buy various items exempt from sales tax if the items are related to the production of property:

  • fuels
  • coolants
  • solvents
  • oils
  • lubricants and adhesives
  • hand tools
  • protective apparel
  • fire and safety equipment.

Meeting Exemption Requirements

A manufacturer’s use of the item also must meet existing requirements for its purchase to qualify for the exemption.

For example, the property must be primarily used in manufacturing and assembly.

Further, product or good manufactured or assembled must be for wholesale or retail sale or lease.

 

If you would like to learn more about how your business may be impacted, please contact David at [email protected]

Dave Yerly

Dave Yerly is a Manager in the Tax Department at CDH. As a business tax advisor, Dave handles a wide range of tax matters for many of CDH’s manufacturing, distribution and wholesale clients. He conducts sales and use tax consulting, apportionment studies, and general bookkeeping, among many other complex tasks. Dave is intimately familiar with complicated international, national and state tax codes and regulations, and works hard to ensure clients receive the best tax outcomes possible. Dave has a Master’s Degree in Taxation and a Bachelor’s Degree in Accounting from Northern Illinois University. Dave is a CPA.