What Qualifies For Tax Exempt
In Illinois (and most other states) manufacturers do not pay sales tax on things used in manufacturing. The following list is things that are tax exempt as long as they are being used in "Manufacturing".
1. Any consumable that is being used in the manufacturing process. (Wood, glue, nails, etc)
2. Tools used in the manufacturing process. (Drills, Edgebanders, hammers, screw tips,etc)
3. Any repair parts for machines used in manufacturing (duct hose relays, air hose, etc)
Definition of manufacturing - Manufacturing starts when the first process is done on raw materials and ends after the last process. Loading and unloading trucks and putting raw materials into racks is not manufacturing, nor is taking the part out of the rack and bringing it to the machine. Once the machine cuts or routs the raw material it is manufacturing. Manufacturing includes assembly of cabinets or components but does not include palletizing, packaging, or loading.
