Manufacturers and industrial processors with facilities located in Tennessee, may be eligible for a utility tax exemption. Tennessee offers an exemption from local sales tax and a reduction in state sales tax on the purchase of electricity, natural gas, and water used in qualifying production activities. This tax exemption is authorized by Tenn. Code Ann. S 67-6-206(b).

Exemption Language of Tenn. Code Ann. S 67-6-206(b)

"Tennessee authorizes manufacturers to purchase gas, electricity, fuel oil, coal and other energy fuels at a reduced sales and use tax rate and in certain circumstances to purchase such substances entirely exempt from tax. (b)1 imposes a 1.5% sales and use tax rate on a manufacturer's purchase and use of such substances. b(3) fully exempts these substances from tax if the manufacturer can establish (by separate metering) they are used exclusively in the direct manufacturing process."

Utility Study Requirement for Exemption Qualification

To qualify for the reduced sales tax rate of 1.5%, the manufacturing process must be described in detail and all applicable equipment must be documented. To qualify for the full exemption, the utility consumption must be separately metered.

Tennessee Statute of Limitations on Tax Refund

3 years

State Sales Tax Rate: 7%

Average Local Sales Tax Rate: 2.53%

Helpful Resources

Tennessee Utility Exemption Certificate: Energy Fuels Exemption Application RV-F1303101

Tennessee Utility Exemption Statute/Rule: Tenn. Code Ann. S 67-6-206(b)

Tennessee Claim Form for Tax Refund: Claim for Refund RV-F1403301