Georgia Utility Sales Tax Exemption (Manufacturing Energy Exemption)

Georgia provides an exemption from state sales and use tax on energy — including electricity, natural gas, and other fuels — that is used directly in the manufacture of tangible personal property. This exemption reduces the operating cost of Georgia manufacturing operations and is authorized under O.C.G.A. § 48-8-3.

Program at a Glance

Tax type	Georgia state sales and use tax (currently 4% state rate, plus local rates)
Who qualifies	Manufacturers of tangible personal property in Georgia
What is exempt	Electricity, natural gas, and other energy used directly in manufacturing
How applied	Exemption certificate filed with utility provider; or refund of previously paid tax
Statute	O.C.G.A. § 48-8-3(34)

Eligibility

The exemption is available to businesses primarily engaged in the manufacture, processing, or conversion of tangible personal property. The energy must be used directly in the manufacturing process: energy used for lighting, heating office space, or other non-production purposes does not qualify.

Qualifying Energy Uses

• Electricity used to power manufacturing equipment, production lines, and machinery
• Natural gas used as a fuel source in manufacturing processes (e.g., firing kilns, heating production areas, fueling boilers tied to production)
• Other fuels (propane, fuel oil, etc.) consumed directly in manufacturing operations
• Energy used in the actual transformation or processing of raw materials into finished goods

Non-Qualifying Energy Uses

• Energy used for general building lighting, HVAC in offices, or employee comfort
• Energy used in administrative, sales, or distribution functions
• Energy used in a process that is incidental to or separate from the manufacturing operation

Mixed-Use Situations

When energy is used for both qualifying manufacturing purposes and non-qualifying purposes in the same facility, the exemption applies only to the portion of energy attributable to qualifying manufacturing use. Businesses must calculate and document the qualifying percentage, typically based on metered sub-readings or engineering estimates. The Georgia Department of Revenue may require documentation supporting the allocation.

How to Claim

There are two primary methods:

• Prospective exemption: The business provides a Georgia Sales Tax Certificate of Exemption (Form ST-5) to its utility provider. The utility provider then bills the qualifying energy without sales tax going forward
• Refund claim: If sales tax has been paid on qualifying energy in prior periods, the business may file a refund claim with the Georgia Department of Revenue (Form ST-12) for taxes paid within the applicable statute of limitations

Key Notes

• The exemption applies only to the state portion of Georgia sales tax. Local option sales taxes may or may not exempt manufacturing energy depending on the locality
• Documentation of qualifying use is essential and should be maintained 
• Businesses that recently began manufacturing operations or expanded to new facilities should establish the exemption prospectively with their utility providers to avoid overpaying
• The statute of limitations for refund claims in Georgia is generally three years from the date of payment

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