What is eligible for the exemption?

A manufacturer/processor for hire is exempt from sales and use tax on: 

• Purchases of machinery and equipment.
• Purchases of tools for repairing qualifying machinery and equipment.
• Charges for hiring someone to repair machinery and equipment.
• Renting equipment (with or without operator) to repair or install machinery and equipment.

Repair services and parts
Because the exemption is limited to items with a useful life of one year or more, some charges for repair, labor, services, and replacement parts may not be eligible for the exemption.  

In the case of labor and service charges that cover both qualifying and non-qualifying repair and replacement parts, the labor and services charges are presumed to be exempt.  If all of the parts are non-qualifying, the labor and service charge is not exempt.