Pennsylvania Utility Sales Tax Exemption

Manufacturers and industrial processors with facilities located in Pennsylvania, may be eligible for a utility tax exemption. Pennsylvania offers an exemption from state and local sales tax on the purchase of electricity, natural gas, and water used in qualifying production activities. This tax exemption is authorized by 61 Pa. Code § 32.32 and 32.25.

Exemption Language 61 Pa. Code § 32.32 and 32.25

"The purchase or use of tangible personal property or services performed thereon by a person engaged in the business of manufacturing or processing is exempt from tax if the property is predominantly used directly by him in manufacturing or processing operations." "The purchase of ... electricity by a person engaged in the business of manufacturing, processing, farming, dairying, printing, mining... may require apportionment between taxable and exempt use if a portion of the purchase is used directly in one or more of these business operations."

Utility Study Requirement for Exemption Qualification

A Pennsylvania utility survey must list every piece of equipment used for production purposes and the annual consumption of each. The consumption of the production equipment is then compared to the actual utility consumption over 12 months to identify the exemption percentage. Failure to properly calculate or classify utility usage is cause for denial of the exemption.

Pennsylvania Statute of Limitations on Tax Refund

3 years

State Sales Tax Rate: 6%

Average Local Sales Tax Rate: 0.34%

Helpful Resources

Pennsylvania Utility Exemption Certificate: Exemption Certificate REV-1220

Pennsylvania Utility Exemption Statute/Rule: 61 Pa. Code § 32.32 and 32.25

Pennsylvania Claim Form for Tax Refund: Petition for Refund REV-65