New Equipment Tax Exemption for Manufacturers and R&D Firms

August 21st, 2014

New Equipment Tax Exemption for Manufacturers and R&D Firms

Beginning July 1st, 2014, a new California law allows manufacturers and some R&D firms to receive a 4% exemption of state sales and use tax on equipment and machinery purchases. For businesses that file taxes as a manufacturer (NAICS codes beginning in 31, 32 or 33) or as a Research & Development firm (filing under NAICS codes 541711 or 541712), part of the sales tax will be waived by the seller by simply attaching an exemption form to the purchase. Qualified purchases include machinery, equipment, and the devices used to operate or control machinery that is an integral part of the manufacturing process.

Even better, these equipment purchases can be financed with either 10 or 20 year SBA 504 loans (terms based on the useful life of the equipment). The loan can be used to finance manufacturing equipment, commercial printing machinery, food processing equipment, lab & technical equipment and much more.

The SBA 504 program was designed to enable growing businesses the ability to secure long-term, fixed-rate financing for commercial real estate, machinery and equipment with as little as 10% down. With an SBA 504 loan you can borrow up to $5.5 million in SBA financing with no limit to the total cost of equipment.

For more information visit the Manufacturing and Research & Development Exemption site at: www.boe.ca.gov/sutax/manufacturing_exemptions.htm

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