2023 Indiana Code › Title 6. Taxation › Article 2.5. State Gross Retail and Use Taxes › Chapter 5. Exempt Transactions of Retail Merchant › 6-2.5-5-2. Agricultural Machinery, Tools, and Equipment; Scope of Exemption; Proration

Sec. 2. (a) Transactions involving agricultural machinery, tools, and equipment, including material handling equipment purchased for the purpose of transporting materials into activities described in this subsection from an onsite location, are exempt from the state gross retail tax if the person acquiring that property acquires it for the person's direct use in the direct production, extraction, harvesting, or processing of agricultural commodities.
(b) Transactions involving agricultural machinery or equipment are exempt from the state gross retail tax if:
(1) the person acquiring the property acquires it for use in conjunction with the production of food and food ingredients or commodities for sale;
(2) the person acquiring the property is occupationally engaged in the production of food or commodities which the person sells for human or animal consumption or uses for further food and food ingredients or commodity production; and
(3) the machinery or equipment is designed for use in gathering, moving, or spreading animal waste.
(c) Transactions involving agricultural machinery or equipment, including material handling equipment purchased for the purpose of transporting materials into activities described in this subsection from an onsite location, are exempt from the state gross retail tax if the person acquiring the property:
(1) acquires it for the person's direct use in:
(A) the direct application of fertilizers, pesticides, fungicides, seeds, and other tangible personal property; or
(B) the direct extraction, harvesting, or processing of agricultural commodities;
for consideration; and
(2) is occupationally engaged in providing the services described in subdivision (1) on property that is:
(A) owned or rented by another person occupationally engaged in agricultural production; and
(B) used for agricultural production.
(d) If a transaction:
(1) involving agricultural machinery, tools, or equipment qualifies for an exemption under subsection (a), (b), or (c);
(2) involves agricultural machinery, tools, or equipment included on the person's business tangible personal property tax return, or, if IC 6-1.1-3-7.2(f) applies, agricultural machinery, tools, or equipment that would otherwise be included on a business tangible personal property tax return; and
(3) the agricultural machinery, tools, or equipment is predominately used for exempt purposes under subsection (a), (b), or (c);
the entire transaction is exempt from the application of the state gross retail tax regardless of whether the person also uses or intends to use the property for a nonexempt purpose.
(e) The amount of state gross retail tax or use tax imposed on transactions involving agricultural machinery, tools, or equipment that meet the qualifications of subsection (d)(1) and (d)(2), but not subsection (d)(3), is prorated based on the purchaser's nonexempt use.
(f) If agricultural machinery, tools, or equipment described in this section is purchased in Indiana but is used outside of Indiana, subsection (d)(2) shall apply as if the agricultural machinery, tools, or equipment was located in Indiana.
(g) The department may amend the administrative rules to conform with subsection (d).
As added by Acts 1980, P.L.52, SEC.1. Amended by Acts 1981, P.L.80, SEC.1; P.L.257-2003, SEC.22; P.L.250-2015, SEC.9; P.L.239-2017, SEC.4; P.L.194-2023, SEC.1.