Manufacturers and industrial processors with facilities located in Alabama may be eligible for a utility tax exemption. Alabama offers an exemption from utility gross receipts tax on the purchase of electricity, natural gas, and water used in qualifying production activities. This tax exemption is authorized by Alabama Code § 40-21-83 and 40-21-103

Exemption Language of Alabama Code § 40-21-83 and 40-21-103

Electricity when "used in an electrolytic or electrothermal manufacturing or compounding process." Natural gas when "used as a chemical raw material in the manufacturing or compounding process, but not as fuel or energy." Water when "50% or more is used in industrial processing."

Utility Study Requirement for Exemption Qualification

Utility studies are typically not allowed in Alabama. Instead, utility consumption must be separately metered. One of our representatives can help you assess eligibility of your usage and assist in the qualification process.

Alabama Statute of Limitations on Tax Refund

3 years

State Sales Tax Rate: 4%

Average Local Sales Tax Rate: 5.22%

Helpful Resources

Alabama Utility Exemption Certificate: Form ST: EX-A1-SE

Alabama Utility Exemption Statute/Rule: Alabama Code § 40-21-83 and 40-21-103

Alabama Claim Form for Tax Refund: Petition for Refund