The Indiana Department of Revenue has updated several sales tax information bulletins affecting public transportation providers, manufacturers, industrial processors, and recycling businesses. Most of the changes take effect October 1, 2026, and provide clearer guidance on when equipment, materials, utilities, and environmental compliance systems qualify for sales and use tax exemptions.
Across the updated guidance, the central test is whether property is directly consumed in—or is essential and integral to—a qualifying activity. Transportation companies should review direct-consumption, predominant-use, rolling-stock, and documentation requirements. Manufacturers and industrial processors should evaluate machinery, tools, consumables, incorporated materials, and environmental compliance equipment based on where and how they are used in the production process. Recycling businesses should also confirm that their operations meet Indiana’s definition of recycling and document qualifying utility usage, including the more-than-50% predominant-use threshold for shared meters.
The practical takeaway is consistent across all four updates: businesses should review purchasing practices, exemption certificates, utility studies, and supporting records to identify available tax savings and reduce audit risk. Equipment used before or after a qualifying production or recycling process, as well as administrative or transportation activities outside the exempt activity, generally will not qualify.
