Supplies and Consumables Used in Manufacturing are Exempt from Illinois Sales and Use Tax Beginning July 1, 2019

Recent tax legislation has expanded the manufacturing exemption to once again include production related tangible personal property. Illinois gives manufacturers a sales tax exemption for purchases of machinery and equipment used in manufacturing or assembling. The new tax law includes supplies and consumables in the definition of machinery and equipment for the exemption.

For example, in addition to supplies, manufacturers can buy various items exempt from sales tax if the items are related to the production of property including:

  • Fuels
  • Coolants
  • Solvants
  • Oils
  • Lubricants and Adhesives
  • Hand Tools
  • Protective Apparel
  • Fire and Safety Equipment

Meeting Exemption Requirements

A manufacturer’s use of the item also must meet existing requirements for its purchase to qualify for the exemption. For example, the property must be primarily used in manufacturing and assembly and the product or good manufactured or assembled must be for wholesale, retail sale or lease. The Department of Revenue must issue rules on how to take the exemption and how it will be administered.

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