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
Schedule a time to connect and take a closer look HERE.
FAQs
Georgia Utility Sales Tax Exemption (Manufacturing Energy Exemption)
A utility sales tax exemption reduces or eliminates sales tax on qualifying utilities, such as electricity, natural gas, or water, when those utilities are used in eligible production or manufacturing activities.
Every state takes a different approach to utility sales tax exemptions. Most states in the Southeast, Northeast, Midwest, and plains offer utility sales tax exemptions. Most West Coast states do not.
Georgia manufacturers and industrial processors may qualify when energy is necessary and integral to manufacturing tangible personal property at a Georgia manufacturing plant. Georgia's regulation provides that qualifying energy can be exempt from sales and use tax when it is necessary and integral to manufacturing and used at a manufacturing plant in Georgia.
Common utilities reviewed include electricity, natural gas, water, and other energy sources used directly in qualifying manufacturing or production activities.
No. The exemption generally applies only to the portion of utility usage tied to qualifying production activities. Office lighting, administrative space, break rooms, HVAC for non-production areas, and other non-qualifying uses may need to be excluded.
A utility study is often used to analyze facility operations, meters, equipment, production processes, and utility consumption. The study determines the portion of utility usage attributable to qualifying exempt production activity.
Potentially. Refund opportunities depend on the jurisdiction, utility provider, documentation, and applicable limitation periods. Many utility exemption reviews evaluate both prospective savings and potential refund claims. In Georgia, businesses can usually recover overpaid sales tax from the prior 36 months.
Typical documents include utility bills, meter lists, facility layouts, equipment lists, production process descriptions, square footage by use, operating schedules, and historical utility consumption data.
Not always. Georgia law and regulations include specific rules and exceptions for state and local sales taxes, including educational-purpose taxes. The Georgia statute provides an exemption for qualifying manufacturing energy from sales and use tax, subject to specified exceptions for educational-purpose taxes.
Many businesses pay utility bills automatically and never perform a facility-level exemption study. Others assume their utility provider is applying the exemption correctly, even when meter usage or production activity has changed.