Are Manufacturing and Machinery subject to sales tax?
While Kentucky'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 Kentucky, including machinery, raw materials and utilities & fuel. To learn more, see a full list of taxable and tax-exempt items in Kentucky.
In the state of Kentucky, the exemption is made available for purchases which will be used in a new and expanded industry. In addition, a refund is available for purchases of any sorts of energy-efficiency machinery or equipment which will be used at a Kentucky manufacturing plant for in the processes of an energy efficiency project.
Sales of raw materials are exempt from the sales tax in Kentucky.
Utilities & Fuel
In the state of Kentucky, any sorts of energy and energy producing fuels which are used in manufacturing, processing, refining, or fabricating are considered to be exempt to the extent that the cost of the energy or fuel exceeds 3% of the cost of production.
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