North Carolina State Manufacturing Exemptions
Sales and Use Tax Discounts, Exemptions and Refunds
North Carolina offers reduced rate allowances on certain parts, accessories and construction supplies for eligible industries and manufacturing processes. For example: Industrial machinery and equipment is exempt from sales and use tax but is subject to an excise tax. This rate is 1 percent with a maximum of $80 per item.
Parts and accessories to manufacturing machinery, which include most supplies used in the manufacturing process but not becoming a part of the manufactured product, including pollution abatement equipment, are taxed at 1 percent.
Purchases of ingredients or component parts of manufactured products are exempt from sales or use tax. Packaging containers and items that become part of a manufactured product and are delivered with the product to the customer are exempt from sales and use tax.
Air courier services; Aircraft manufacturing; Bioprocessing; Financial services, securities operations and related systems development; Motor vehicle manufacturing; Paper-from-pulp manufacturing; Pharmaceutical and medical manufacturing and distribution; Semiconductor manufacturing; Solar electricity generating materials manufacturing; and Turbine manufacturing companies may receive a refund of sales taxes on purchases of building materials, fixtures and equipment if the facility costs at least $50 million in Tier 1 counties and $100 million in Tier 2 and 3 counties. A taxpayer engaged in analytical services may also get a refund of sales taxes.
Sales for electricity sold to qualifying manufacturing industries and plants are exempt from sales and use tax.
Sales of electricity and eligible business property to an internet datacenter or software publishing datacenter business that invests at least $250 million in private funds are exempt from sales and use tax.
Piped natural gas is exempt from sales and use tax but is subject to an excise tax. This tax rate is based on the number of therms of gas consumed in a month.
Coal, coke and fuel oil used in manufacturing is taxed at 1 percent.
Motor vehicles are exempt from sales and use tax but are subject to the highway use tax. Highway use tax is 3 percent of the retail value of the motor vehicle with a maximum tax of $1,500 per vehicle.
Aircraft, boats, railway cars and mobile offices are taxed at 3 percent with a maximum tax of $1,500 per item.
Custom computer software and computer software delivered electronically are exempt from sales and use tax. All telecommunications services are taxed at a rate of 6 percent.
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substantial tax saving benefit. Our initial review will determine the validity of your refund status and as always, the consultation is absolutely free. Our work is performed on a contingency fee basis, “if we do not perform no fee is due!”