Kansas Utility Sales Tax Exemption
Kansas offers a sales and use tax exemption on electricity, natural gas, and water when these utilities are used directly in qualified production activities such as manufacturing, processing, mining, drilling, refining, or compounding tangible personal property. The law (K.S.A. 79‑3602(dd)) specifies that utilities must be essential or necessary to production and consumed or depleted within one year to qualify.
Qualifying Usage
To qualify, utility usage must be directly tied to production operations.
- Powering machinery or equipment used in manufacturing or processing
- Generating steam or heat in a production process
- Transporting or treating raw materials or product
- Controlling environment conditions (temperature, humidity) for production integrity
General and administrative utility uses—such as lighting, office HVAC, or break rooms—are not eligible for exemption.
Utility Study
A utility study is required. This must list every equipment or appliance using the utility (both production and non-production), document annual usage for each, and calculate the exempt percentage.
Filing Requirements and Refunds
Businesses must complete and submit Kansas Form ST‑28B (Statement for Sales Tax Exemption on Utilities) to their utility provider. The form establishes the exempt percentage and once accepted, utilities will apply the exemption on future billing. If sales tax was previously collected on qualifying usage, businesses may request a refund via Kansas Form ST‑33 (Claim for Refund). Refunds are available for up to 36 months prior to filing.