California Sales Tax on Manufacturing and Machinery California: Sales Tax Handbook


Are Manufacturing and Machinery subject to sales tax?

While California's sales tax generally applies to most transactions, certain items have special treatment in many states when it comes to sales taxes. This page describes the taxability of manufacturing and machinery in California, including machinery, raw materials and utilities & fuel. To learn more, see a full list of taxable and tax-exempt items in California.

In the state of California, between the dates of July 1, 2014, and July 1, 2022, an exemption will be made applicable to the gross receipts from the sale, storage, use, or other consumption in California of certain qualified tangible personal property, which includes machinery and equipment, which has been purchased for use by certain qualified persons to be used primarily in any stage of manufacturing, processing, refining, fabricating, or recycling of tangible personal property.

Raw Materials
In the state of California, the tax is applicable only to materials which are consumed, but not incorporated in the process of manufacturing property.

Utilities & Fuel
In the state of California, the gas, electricity, and water, which includes steam, geothermal steam, brines, and heat are considered to be exempt when they are delivered to consumers through the use of mains, lines, or pipes. Fuel oil is considered to be taxable.

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