Ohio Utility Sales Tax Exemption

Manufacturers and industrial processors with facilities located in Ohio, may be eligible for a utility tax exemption. Ohio offers an exemption from state and local sales tax on the purchase of natural gas used in qualifying production activities. This tax exemption is authorized by Ohio Revised Code § 5739.02(B)(42)(g).

Exemption Language of Ohio Revised Code § 5739.02(B)(42)(g)

Ohio Revised Code § 5739.02(B)(42)(g) exempts from sales and use tax the "thing transferred… to use the thing transferred, as described in section 5739.011 of the Revised Code, primarily in a manufacturing operation to produce tangible personal property for sale." This provision allows manufacturers to claim an exemption on natural gas when it is used as a qualifying input in the production process. To qualify, the natural gas must be used in a manner consistent with the definitions and criteria outlined in R.C. § 5739.011, which further clarifies what constitutes exempt manufacturing use.

Utility Study Requirement for Exemption Qualification

An Ohio utility tax study must list every piece of equipment and appliance (production and non-production) that uses the utility and the annual consumption of each. Failure to properly calculate or classify utility usage is cause for denial of the exemption.

Ohio Statute of Limitations on Tax Refund

4 year

State Sales Tax Rate: 5.75%

Local Sales Tax Rate: 1.55%

Helpful Resources

Ohio Utility Exemption Certificate: Exemption Certificate STEC B https://dam.assets.ohio.gov/image/upload/procure.ohio.gov/pdf/ST_STEC_B_FI.pdf

Ohio Utility Exemption Statute/Rule: Ohio Revised Code § 5739.02(B)(42)(g) https://codes.ohio.gov/ohio-revised-code/section-5739.02

Ohio Claim Form for Tax Refund: STAR Refund Application https://dam.assets.ohio.gov/image/upload/tax.ohio.gov/forms/sales_and_use/Appeals2012/ST_STAR_FI.pdf