Example 2: If your state contends that production begins when materials are taken out of inventory to be placed into production, the equipment used to move these materials may qualify for a tax exemption. Example 3: Equipment used to move products during the manufacturing process often qualifies for tax exemptions, depending on the state. Biennial Tax Expenditure Report; Billboard Structures Valuation Guide; Changes to Monthly Report of State Sales and Use Tax Gross Collections and Gross Retail Sales (January 2002) Changes to Monthly Report of State Sales and Use Tax Gross Collections and Gross Retail Sales (July 2005) Collections for Month Ending April 30, 2008 describes the nature of “manufacturing,” what types of purchases or sales by manufacturers are taxable or exempt, and what a manufacturer must do to comply with the law. This information relates to the state’s5% sales and use tax. manufacturing machinery and equipment exemption includes production related tangible personal property, such as supplies and consumables including fuels, coolants, solvents, oils, lubricants, and adhesives, hand tools, protective apparel, and fire and safety equipment, primarily used or consumed in a manufacturing process.