Texas Court Ruling Expands Sales Tax Exemptions for Equipment in Raw Material Processing

• Texas businesses previously did not qualify equipment for sales tax manufacturing exemption
• Recent court decision and policy shift create new tax savings opportunities
• Texas law allows sales tax exemption for unprocessed sand
• Equipment for pretreatment activities was traditionally excluded from exemption
• Texas Comptroller viewed these activities as pre-manufacturing
• Westmoreland decision ruled equipment for lignite extraction qualifies for exemption
• Court recognized excavation, blasting, and extracting as processing activities
• Decision expands scope of activities qualifying for manufacturing exemption
• Effective October 1, 2025, new policy applies recognizing these activities
• Equipment must cause chemical or physical change to qualify for exemption
• Exemption does not apply if no change to materials occurs

Source: weaver.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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