Is Manufacturing Equipment Exempt From Sales Tax in Oklahoma?

Yes, for qualifying manufacturers. Oklahoma exempts machinery, equipment, raw materials and other items used in a manufacturing operation from sales and use tax, but you need a Manufacturer Sales Tax Exemption Permit from the Oklahoma Tax Commission and must give it to your vendors. Items used for office, sales, transportation or construction stay taxable.

$5,000,000Building or expanding a plant? OTC rules also exempt construction materials for a qualified manufacturer's new or expanded facility, for example when construction costs exceed $5,000,000 and the facility adds at least 100 new full-time-equivalent jobs.

Yes, if you're a manufacturer and the equipment is used in your manufacturing operation. Under 68 O.S. § 1359 and Oklahoma Tax Commission rules, purchases by a manufacturer of property and services used in a manufacturing operation are exempt from Oklahoma sales and use tax. That covers manufacturing machinery and equipment, plus raw materials, production supplies, tools, and qualifying utilities. To use the exemption, you apply to the Oklahoma Tax Commission (OTC) for a Manufacturer Sales Tax Exemption Permit and give a copy to your vendors.

Last checked: October 31, 2026. This page explains the rules only. It is general information, not legal, tax, or financial advice.

The short version

What's exempt	manufacturing machinery and equipment and their repair or replacement parts, raw materials, production and manufacturing supplies, tools, testing equipment, warehousing and shipping supplies, and fuel or electricity used in production.
What stays taxable	items used for administration, sales, distribution, transportation, site construction or site maintenance.
Mixed use	an item used mostly in manufacturing stays exempt. Minor other use is treated as incidental.
The permit	the OTC issues a Manufacturer Sales Tax Exemption Permit, good for three years, and you renew it after that.
Who can't use it	extractive work like mining, logging and oil and gas drilling isn't manufacturing under state law, and OTC rules say marijuana processors aren't eligible.

Who qualifies

Oklahoma defines manufacturing as changing the form, composition or quality of materials into something with a different form or use, by processes the average person would call manufacturing, compounding, processing or assembling.
You may qualify if you:
Make, process, compound or assemble products for sale at a manufacturing site in Oklahoma.
Do sub-assembly work as a subcontractor that leads to a manufacturer's finished product (OTC rules say this may qualify).
Can show the OTC what you make and what machinery and equipment you use.
You generally don't qualify for this exemption if your work is extractive, such as mining, quarrying, logging, or drilling for oil, gas or water, or oil and gas field processing.

What's covered and what isn't

OTC rules list examples of exempt purchases when used in a manufacturing operation: manufacturing machinery, equipment and repair parts; dust collectors, paint booths, conveyors and forklifts; raw materials; lubricants consumed in production; work clothing and safety gear; hand tools used on the product; scales; testing and quality control equipment; production waste disposal equipment; flow racks, storage units, packaging and labels; and boxes and tape for shipping. Coal, fuel, electricity, natural gas and steam qualify when used in production.

The manufacturing operation starts when materials enter the site and ends when the finished product leaves it. Purchases for the office, sales and marketing, delivery vehicles and other transportation, building construction or remodeling, and site maintenance are taxable.

How to get it

How to get started

Read the OTC's Packet M, the Oklahoma Business Registration Packet for Manufacturers, which includes the OTC's manufacturing rules.
Complete the manufacturer section of the application, including your six-digit NAICS code, a description of your process, the share of utilities used in manufacturing, and a list of your production machinery and equipment.
Submit the application with the permit fee shown in the packet. If you have questions, call the OTC Taxpayer Resource Center at 405-521-3160.
Once you have the permit, give a copy (or its number) to each vendor so they don't charge sales tax on qualifying purchases.
If a utility account is used mostly for manufacturing, show the permit to the utility to claim the exemption.
Keep records showing how exempt items are used, and renew the permit before it expires.

Programs that may match

Look beyond the sales tax exemption

Oklahoma Quality Jobs Programcash incentives for qualifying employers that add new jobs. See our Oklahoma Quality Jobs guide.Building or expanding a plant? OTC rules also exempt construction materials for a qualified manufacturer's new or expanded facility, for example when construction costs exceed $5,000,000 and the facility adds at least 100 new full-time-equivalent jobs.Other state creditssee Oklahoma small business tax credits.Federal optionssee manufacturing grants and incentives, or take FundPlenty's free match at fundplenty.com.

FAQ

Is manufacturing equipment exempt from sales tax in Oklahoma?

Yes, when a manufacturer buys it for use in a manufacturing operation. You need a Manufacturer Sales Tax Exemption Permit from the Oklahoma Tax Commission and must give it to your vendor.

How long is an Oklahoma manufacturer exemption permit good for?

The OTC says a manufacturer sales tax exemption permit is issued for a three-year period, and it must be renewed after that.

Are utilities exempt for Oklahoma manufacturers?

Electricity, natural gas and other fuels used in the production process can be exempt. OTC rules say if a single meter is used mostly for manufacturing, the rest of the usage is treated as incidental and is also exempt. Present your permit to the utility.

Are forklifts and delivery trucks exempt?

OTC rules list forklifts as exempt manufacturing equipment when used in the manufacturing operation. Vehicles used to move goods to customers count as transportation or distribution, which is taxable.

Does the exemption cover office equipment?

No. Items used for administration, sales, distribution, transportation, site construction or site maintenance are taxable, even at a manufacturing site.

Can oil and gas companies use the manufacturer exemption?

Not for extractive work. Oklahoma law says manufacturing doesn't include drilling for oil, gas or water, mining, quarrying, logging, or oil and gas field processes.