Manufacturing Utility Sales Tax Exemptions in Minnesota

If you own a manufacturing business in Minnesota, you may qualify for a sales tax refund on your utilities.

• A manufacturing exemption is available for electricity, natural gas, or water used or consumed in agricultural or industrial production.
• The exemption percentage is determined based on the actual percentage of the utility being used in the manufacturing process.
• A Predominant Use Utility Study is required for all meters to claim the sales tax exemption.
• Manufacturing companies are eligible for a 42-month refund period; but can only file 2 refund claims annually regardless of the tax type being claimed.

SM Engineering’s Process for Minnesota Manufacturing Sales Tax Refunds:

• The Minnesota Department of Revenue offers detailed information and examples of qualifications here.
• An update to the Predominant Use Utility Study is required every few years or at any time a major operational change occurs such as an increase/decrease in production hours, adding or removing pieces of equipment, or a change in building square footage.
• Manufacturing companies are required to use a ST3 – Certificate of Exemption which must be submitted to utility providers.
• Minnesota’s electricity and natural gas use occurs through service provided by investor owned, cooperative, municipal and private utilities. To track usage trends, the Minnesota Department of Commerce collects data from Minnesota’s electric and natural gas utilities pursuant to the Minnesota Rules parts 7610.0100 to 7610.1130. The Minnesota Utility Data Book is a compilation of some of that information.
• Utility Companies such as Xcel Energy publish and maintain detailed Electric and Natural Gas Rate Books which include basic information on rates, adjustments, and other specifics.