Manufacturing machinery & equipment sales tax exemptions
South Carolina offers sales and use tax exemptions for manufacturing machinery and equipment used in the production of tangible goods. These exemptions help reduce upfront costs for companies that locate, expand or operate manufacturing facilities in the state.
Sales and use tax applies to most retail sales of tangible personal property in South Carolina. The state rate is 6%, and many local jurisdictions also assess local option sales tax. However, the state provides a range of exemptions to support industrial growth and competitiveness.
What the exemption covers
South Carolina’s sales tax exemptions for manufacturing include:
- Machinery and equipment used in the production of tangible goods
- Repair parts for qualifying machinery and equipment
The exemption applies to machinery and equipment that is directly used in manufacturing, processing, agricultural packaging, recycling, compounding, mining or quarrying tangible personal property for sale. These exemptions are part of a broader suite offered to support new and expanding industry.
Why the exemption matters
Manufacturing machinery and equipment represent substantial capital investment for businesses. Exempting these purchases from sales and use tax can:
- Reduce initial investment costs
- Improve project feasibility and cash flow
- Increase competitiveness for new and expanding facilities
- Support long-term investment and job creation in South Carolina
This exemption aligns with the state’s broader economic development strategy to position South Carolina as a competitive location for advanced manufacturing and industrial operations.
What qualifies as machinery & equipment?
Under South Carolina law, items that may qualify for the exemption include:
- Machines used in manufacturing, processing, compounding, mining or quarrying tangible personal property for sale
- Repair parts, attachments and replacements used in the operation of qualifying machinery
- Equipment that is integral to and necessary for the manufacturing process
- Material handling machinery when it directly supports manufacturing operations
For regulatory purposes, a “machine” is considered exempt if it is used on an ongoing and continuous basis in the manufacturing process and is an essential part of producing a product for sale.
How the exemption works
When purchases qualify for the manufacturing machinery and equipment exemption:
- Sales tax is not due on eligible machinery and equipment at the time of purchase
- The exemption applies to both state and local sales and use taxes
Exemption eligibility depends on use, not simply on industry classification. Equipment must be substantially used in manufacturing operations to qualify.
Frequently asked questions
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