Ohio Utility Sales Tax Exemption
Ohio provides a full sales and use tax exemption on utilities, including electricity, natural gas, water, steam, coke, and similar substances—when they are used primarily (over 50%) in qualifying manufacturing operations or other exempt production activities. This exemption is authorized under Ohio Revised Code § 5739.02(B)(42)(g) and defined further in § 5739.011.
Utility Study Requirement
To support eligibility, a utility usage study is recommended and often necessary. The study should:
- List every meter and all equipment or systems consuming the utility
- Classify each usage as either exempt (directly in manufacturing) or non‑exempt (e.g., lighting, HVAC, administration)
- Measure or estimate annual consumption for each category
- Calculate the percentage of usage tied to production and confirm it exceeds 50%
- Maintain records, studies, and calculations for audit preparedness
If more than 50% of the utility use at a meter is linked to qualifying production, the entire consumption from that meter is exempt. Otherwise, exemption claims must be prorated and supported.
Filing Requirements
To claim the exemption, businesses must provide utility providers with a correctly completed Sales Tax Exemption Certificate (such as Form STEC U for single purchases or Form STEC B for blanket coverage). This certificate should indicate that the utility usage is used directly in manufacturing operations for sale. If sales tax was paid on qualifying utility usage prior to providing the exemption certificate, businesses may file a refund claim with the Ohio Department of Taxation using Form ST‑AR (Application for Sales Tax Refund). Refunds can be claimed for up to four years from the date of payment. Supporting documentation including utility bills, exemption certificates, and usage studies must be retained and provided as part of the refund claim.