Florida Utility Sales Tax Exemption
Florida provides a sales tax exemption on utilities such as electricity, steam, and natural gas when used directly in qualified industrial production or manufacturing processes. The exemption helps reduce operating costs for manufacturers and similar businesses. It is authorized under Florida Statutes § 212.08(7)(ff) and related provisions.
Qualifying Uses
To qualify, electricity or steam must be used at a fixed location to operate:
- Industrial machinery and equipment used to manufacture, process, compound, produce, or prepare tangible personal property for sale
- Pollution control or recycling equipment
- Maintenance equipment related to production
Only certain industries qualify, primarily those falling under SIC codes 10, 12–14, 20, 22–39, or NAICS 423930.
Exemption Thresholds
- If 75% or more of the utility is used in qualifying activities, 100% of the charges are exempt
- If between 50% and 75% is used in qualifying activities, 50% of the charges are exempt
- If less than 50%, no exemption applies
Filing Requirements
The Florida utility sales tax exemption requires a utility study to determine the percentage of utility usage directly tied to qualifying production activities. This study includes a comprehensive list of all equipment consuming the utility, an allocation of usage between production and non-production functions, and supporting calculations to establish the exemption percentage. Once the qualifying percentage is determined, businesses must complete and submit an exemption certificate such as Florida Form DR-97 to their utility provider. The provider will then stop collecting sales tax on eligible utility usage. If sales tax was previously paid on qualifying usage, businesses may apply for a refund of up to three years by submitting Florida Form DR-26S.