Machinery and equipment used directly and predominantly in the production of tangible personal property for sale can be purchased exempt from sales tax using Form ST-121, Exempt Use Certificate. Machinery and equipment used in the administration or distribution phases does not qualify for the exemption.

Is capital equipment taxable?

Most businesses know they shouldn’t pay taxes on large capital manufacturing purchases like plant machinery and equipment, but they may not know they are exempt from paying for materials used in repairs of this equipment, or potentially consumable supplies like towels, safety equipment, lubricants and even boots.

Are clothes taxed in NC?

In the state of North Carolina, any types of alteration charges which are stated separately and are in connection with the sale of clothing are considered to be exempt.

Does North Carolina have a manufacturing exemption?

North Carolina does not levy a sales and use tax on repairs to industrial machinery or service contracts for mill machinery. Retail sales, as well as the use, storage or consumption of electricity, fuel and piped natural gas sold to a manufacturer are exempt from sales and use tax for use in a manufacturing operation.

Are there sales tax exemptions for machinery in North Carolina?

Beginning July 1, 2018 purchases of qualifying mill machinery, machinery parts and manufacturing accessories will be exempt from both North Carolina sales and use tax as well as the privilege tax.

How does sales tax work in North Carolina?

North Carolina will only issue sales tax refunds directly to the entity that paid the tax. Therefore manufactures must request a credit or check from their vendors who originally collected the sales tax.

Where to report certain machinery and equipment tax?

The certain machinery and equipment tax is to be reported to the Department on the Machinery and Equipment Tax Return, Form E-500J.

Do you pay property tax on inventories in North Carolina?

North Carolina and its local governments do not levy a property tax on inventories. Inventories owned by contractors, manufacturers and merchants (retail and wholesale) are excluded from property tax.