Manufacturing machinery & equipment sales tax exemption
South Carolina provides a sales and use tax exemption for qualifying machinery and equipment used in manufacturing and other eligible production activities. The exemption can help reduce upfront costs for companies locating, expanding or operating facilities in the state.
What the exemption covers
South Carolina's machine exemption applies to qualifying machines used in:
- Manufacturing
- Processing
- Agricultural packaging
- Recycling
- Compounding
- Mining
- Quarrying
The qualifying activity must involve tangible personal property produced for sale.
The exemption may also apply to parts, attachments and replacements used in the operation of qualifying machines when they meet applicable requirements. The exemption does not include automobiles or trucks.
Why the exemption matters
Large project sales tax exemptions can help companies:
- Reduce upfront costs associated with major capital investments
- Strengthen the business case for locating or expanding in South Carolina
- Improve the economics of investments in manufacturing, distribution and technology-intensive operations
- Support long-term growth as operations scale in the state
These exemptions are part of South Carolina's broader approach to supporting significant business investment and long-term economic growth.
What qualifies as machinery and equipment?
A machine generally must be integral and necessary to the manufacturing process and used on an ongoing and continuous basis during that process to qualify.
Qualifying property may include:
- Machines used directly in qualifying production activities
- Parts, attachments and replacements necessary to the operation of qualifying machines
- Certain material-handling equipment used as part of the manufacturing process
Eligibility depends on how the machinery or equipment is used. Equipment used solely for warehousing, distribution or administrative purposes generally does not qualify under the machine exemption.
How the exemption works
When a purchase qualifies for the machine exemption, South Carolina sales and use tax does not apply to the qualifying machinery, equipment, parts or attachments.
Eligibility is based on the use of the property, not simply the company's industry classification. Machinery and equipment must meet applicable requirements for use in a qualifying production activity.
Claiming the exemption
The South Carolina Department of Revenue (SCDOR) administers the exemption. Companies may use Form ST-8, Exemption Certificate, to document qualifying purchases.
The completed certificate is provided directly to the vendor and is not submitted to SCDOR. Companies are responsible for ensuring that purchases meet applicable exemption requirements.
SCDOR resources
Machine exemption requirements and guidance
