Manufacturing machinery and equipment tax exemption is expanded in Illinois

The manufacturing sales and use tax exemption has been expanded in Illinois.  Effective on July 1, it expanded to include production-related tangible personal property used or consumed by a purchaser in a manufacturing facility.

Illinois also expanded the definition of production-related tangible personal property.  It now includes supplies and consumables used in a manufacturing facility such as fuels, coolants, solvents, oils, lubricants, and adhesives, hand tools, protective apparel, and fire and safety equipment used or consumed within a manufacturing facility.

This broadens the exemption to include items previously qualifying for the tax credit under the Manufacturer’s Purchase Credit (MPC) and brings Illinois’ exemption more in line with other midwestern states.

The updated exemption presents an opportunity for manufacturing businesses to reevaluate the items they are treating as exempt from sales tax in their manufacturing processes and to make sure they are not paying unnecessary taxes for newly exempt items. Staying up-to-date with ever-changing regulatory requirements allows manufacturers to keep costs low to remain competitive.

To learn more about the expansion of the manufacturing machinery and equipment tax exemption and how it affects your business, please contact a Dugan & Lopatka professional at (630) 665-4440 or

related articles