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Learn how utility sales tax exemptions reduce costs on electricity, gas, and water. See who qualifies, how to apply, and state-specific rules.
Utility Sales Tax Exemption Basics
A utility sales tax exemption allows qualified businesses or individuals to avoid paying state sales tax on certain utilities, such as electricity, natural gas, water, or fuel, when they are used for exempt purposes like manufacturing, agriculture, R&D or residential heating
Most states require submitting a Utility Exemption Certificate to your utility provider. If only part of your usage qualifies, you may need a predominant use study (Utility Use Study) to determine the percentage of exempt consumption.
A Predominant Use Study determines what percentage of a utility (electricity or natural gas) is used for non-taxable activities. In Texas, when 51% or more of a utility’s usage qualifies as non-taxable, the entire utility bill is exempt from sales tax.
Who Qualifies
Why Leyton
Years Serving Businesses
Countries
States Supported
Saved on Tax
How it helps
The company operates a 250,000-square-foot manufacturing plant with heavy energy demand. OH allows for a complete exemption if over 50% is used in the manufacturing process, which could translate into substantial annual savings
Our Approach
Leyton’s end-to-end Utility Sales Tax Exemptions service combines engineering precision with tax expertise. From initial eligibility checks to refund recovery and compliance support, we handle it all – ensuring clients secure every dollar of eligible savings.
We evaluate your business, utility usage, and state-specific exemption opportunities. Our specialists identify where you may qualify for utility sales tax exemptions and estimate your potential savings.
When required by the state, our licensed engineers perform a Predominant Use Study to measure exempt utility consumption and provide the documentation needed to support your exemption claim.
We prepare and submit all required exemption certificates and supporting documentation to the appropriate state agencies and utility providers, ensuring compliance with applicable regulations.
We recover eligible overpaid utility taxes through available look-back periods while providing ongoing compliance support, renewal assistance, and guidance to help you maximize future tax savings.
Trusted State & Local Tax Advisor
Supporting clients through every step of their State and Local Tax foot print.
President
@Grass365
“I cannot state how much Brian Ess and Leyton helped my business. We had a very unique tax situation that was hard to gauge by multiple tax advisors. We knew we had an issue that had to be solved and the brevity of the situation was a very large number for our company to absorb. Brian and his team were able to guide us through and negotiate on our behalf with the state. Their navigation was so much better than we could have hoped for. We settled for something like pennies on the dollar. I would highly recommend Brian and Leyton to help anyone out with local state tax guidance. Thank you Brian I’d kiss you if l could!”
Co-founder
@Oh Clementine
“The Leyton team has demonstrated great attention to detail and competence in helping us with our state and local tax management. Brian and Grace have been easy to work with, proactive communicators, and very accessible. Highly recommend for any business trying to navigate sales tax compliance, VDAs, and more.”
Owner
@Lost Artistry Lash
“The Leyton team, and especially Brian, have been super helpful over the years with all our international sales tax needs. Would highly recommend.”
Get in Touch
Leyton’s State & Local Tax (SALT) experts collaborate with your accountants and automation solutions to ensure that your business has its SALT affairs in order, providing accurate insights that enable sustainable business growth.
FAQs
Can’t find the answer you’re after? Please contact our team
Yes – even with a certificate in place, it may be necessary (or required) to recalculate your exempt utility usage when your exemption certificate expires or major changes occur. This includes:
switching utility providers, merging with another business, altering your production process, adding new machinery, adjusting manufacturing output, receiving a new meter, orrelocating/expanding your facility.
These changes can affect your exemption status, so keeping your study current helps ensure compliance and maximizes savings.
Depending on the state, exemptions may apply to:
The specific utilities and exemption rules vary by jurisdiction.
Yes. Many states allow businesses to recover utility sales tax paid in error through a refund claim. Look-back periods typically range from 3 to 4 years, depending on the state’s rules.
Yes. Once approved, the exemption is typically applied directly to future utility bills, reducing ongoing sales tax. Some states also require periodic renewals to maintain the exemption.