Generally, tangible personal property sold to, purchased or rented by manufacturers is subject to retail sales tax, unless specifically exempt by law. Taxable examples include:
- Office equipment and supplies (i.e., desks, office computers, envelopes)
- Hand tools (i.e., hammers, wrenches, rakes, drills)
- Disposable products or products that last less than one year (i.e., disposable liners or filters)
- Items not used directly in the manufacturing process (i.e., boots, garbage cans, cleaning equipment)
Also, certain retail services sold to or purchased by manufacturers are subject to retail sales tax or use tax, unless specifically exempt by law. Taxable examples include:
- Construction of buildings
- Installation of non exempt fixtures, machinery, or equipment
- Repair of non-exempt buildings, machinery, or equipment
If you are not charged sales tax at the time of sale, you must pay use tax directly to the Department on the purchase price of taxable items, including any shipping or delivery costs. You may report and pay use tax on your Department of Revenue tax return.
The law provides Washington manufacturers with specific sales/use tax exemption and deferral programs. These programs are discussed under the “Manufacturing Tax Incentives” section, and include:
- Sales/use tax exemption for machinery and equipment used directly in the manufacturing process, installation and repair parts and services for qualifying machinery and equipment;
- Sales/use tax deferral on qualified construction and equipment costs for wine manufacturers located in rural counties, Community Empowerment Zones (CEZs) and counties containing CEZs.