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SMART TAX USA - Wisconsin State Tax Exemptions for Manufacturing Facilities

The State of Wisconsin levies a 5% sales tax on companies that sell, license, lease or rent tangible personal property or digital products in Wisconsin. The 5% sales tax also applies to companies that sell, license, perform or furnish taxable services in Wisconsin. A 5% use tax may apply to the same types of property or services if sales tax has not previously been paid. 61 of the 72 counties in Wisconsin levy an additional .5% sales tax on most purchases. Companies located outside a county that has an additional sales tax must still pay the tax if they sell taxable goods or services to consumers who are inside the county.

In Wisconsin, manufacturing is considered to be the production by machinery of a new article that has a different form, use and name when compared to the pre-existing component material or materials. For the purposes of sales tax exemptions, manufacturing does not include storage, delivery to or from the plant, repairing and maintaining facilities, or research and development. According to Wisconsin Tax Publication 203, sales and use tax exemptions for manufacturers include:

Sales Tax Exemption for Manufacturing Machines and Specific Processing Equipment

Gross receipts from the sale, storage or use of machines and specific processing equipment, repair parts or replacement parts are exempt from sales and use tax in Wisconsin provided that such machines and equipment are used exclusively and directly in primary manufacturing operations.

Sales Tax Exemption for Ingredients or Component Parts and Consumable Items

Wisconsin provides a sales tax exemption for the sale, storage or use of tangible personal property that is an ingredient or component part of a finished product even if the ingredient or component part is consumed, destroyed or loses its identity during the manufacturing process. Some examples of items typically exempted include acids, bleaching agents, catalysts, chemicals, cleaning compounds and solvents for maintaining manufacturing machinery, cutting and lubricating oils, filtering clay, fluxing material, foundry sand, greases, lapping and grinding compounds, purification agents, sandpaper, shielding gases, and wood used to smoke products.

Sales Tax Exemption for Containers and Other Packaging and Shipping Materials

Gross receipts from the sale, storage or use of containers, labels, sacks, cans, boxes, drums, bags or other packaging and shipping materials are exempt from Wisconsin sales tax if the items are used to pack and/or ship products to consumers. Packing and shipping items used to protect meat or meat products are exempt from Wisconsin sales tax regardless of whether such items are used to transfer merchandise to customers.

Sales Tax Exemption for Fuel and Electricity

Both sales and purchases of fuel or electricity consumed during the manufacturing of tangible personal property are exempt from Wisconsin sales and use tax.