This article was originally written in October 2025 and was updated in February 2026
The Highlights
- Sales tax exemption rules can vary significantly state-by-state.
- Many states offer massive tax incentives for R&D and job creation.
- You can secure exemptions in multiple states with a tax expert like RJM.
Small businesses securing tax deductions have to do a ton of legwork in 2026, considering the breakneck pace of rule and rate changes in 2025. Use these RJM Tax Exemption business tax compliance strategies to maximize your exemptions and take your tax planning to the next level.
State-by-State Strategies
Alabama
You’ll need a sales tax permit from the Alabama Department of Revenue before you can secure exemptions. You can then use Form ST: EX-A1 to apply for a certificate of exemption. This certificate will remain valid until revoked by the DOR.
Alaska
As far as small business tax exemption strategies are concerned, this state has no statewide sales tax. However, you can secure:
- Local property tax exemption/credits for startups in rural areas.
- An MTC resale certificate that can then be used to secure exemptions from vendors.
Arizona
You can apply for a Transaction Privilege Tax exemption certificate through the state’s DOR. These exemptions are applicable for a range of use-cases, in particular, for innovation and renewables like solar installations.
Arkansas
Arkansas allows for sales tax exemptions and deductions on machinery directly used in manufacturing, company childcare facilities, recycling equipment, replacement and repair of equipment, electricity/gas/coal used in manufacturing, and employee tuition.
California
Small business tax deductions are based on hiring and sustainability:
- The California Competes tax credit is available for small businesses growing in the area.
- Another great small business tax exemption strategy is to apply for a resale exemption via the CDTFA-230 form.
Colorado
Sellers in Colorado can use the MTC Uniform certificate to claim credits. The state also offers enterprise zone credits for employee training costs.
Connecticut
Connecticut offers 100% exemptions to certain businesses involved in R&D, agricultural items, food products, and certain educational items. Get the right form for your business on the CT portal and file online.
Delaware
Delaware offers massive amounts of corporate relief through income tax deductions and more. However, there is no state sales tax and therefore no exemption certificates.
Florida
Businesses in Florida can apply for significant property incentives. Apply for a resale exemption certificate (annual) on the Florida DOR to get started with this small business tax exemption strategy.
Georgia
Most business tax compliance strategies recommend using Georgia’s Job Tax Credit program to secure exemptions based on the tier of jobs created.
Hawaii
Hawaii offers high-tech tax incentives, allowing for exemptions on a percentage of R&D costs. Up to 35% of expenses on renewables can also be refunded as credits for small businesses.
Apply for small business tax deductions online via the Hawaii DOR.
Idaho
Businesses in Idaho can claim credits for up to 3% of expenses on new, depreciable property such as machines, as well as a resale exemption certificate (ST-101) that’s valid indefinitely.
Illinois
Apply for an Illinois resale exemption certificate via CRT-61. This needs to be renewed every 3 years. Some small business tax exemption strategies point out exemptions for data centers and job creation, but these are typically valid for businesses that invest sizable amounts ($12 million+).
Indiana
Indiana offers R&D credits for 15% of qualified expenses, up to $1M for small businesses, claimable via. IT-20REC. Sellers can also apply for an indefinite resale certificate.
Iowa
Businesses in Iowa can get refunds for the purchase of machinery (small producers only) via. Form 843. The resale exemption certificate in this state is valid for 5 years.
Kansas
Kansas-based businesses can get PEAK credits for new jobs, along with HPIP credits through Schedule K-59.
Kentucky
Many successful small business tax exemption strategies revolve around Kentucky’s sweeping energy efficiency credits and exemptions programs, including credits up to $5 per sq. ft. for renewable investments.
Louisiana
Businesses can apply online for a resale certificate, and franchises may be able to secure tax exemptions for firms with under $1M in assets through form CIFT-620.
Maine
Maine’s resale exemption certificate is valid for 5 years and easily obtainable online. The state also offers R&D credits for up to 7% of expenses, ideal for small businesses prioritizing tax deductions and most business tax compliance strategies.
Maryland
Businesses should prioritize securing the state’s indefinite resale exemption certificate. Additionally, the state offers broad incentives for employers through the EITC expansion.
Massachusetts
For Massachusetts, your small business tax exemption strategy should focus on the state’s significant R&D credits (Form M-990) and growth incentives for small businesses, along with an indefinite resale certificate.
Michigan
Michigan allows for significant deductions in the manufacturing and R&D sectors. The resale exemption certificate here is valid for 4 years.
Minnesota
The Small Business Credit Initiative in the state offers massive incentives for startups upon application, along with R&D credits obtainable through DEED.
Mississippi
Businesses can apply for a wide range of exemptions through the Mississippi Development Authority. The state offers incentives for research, expansion, capital, and renewables investment.
Missouri
Missouri has created a strong tax credit program for employee training through the Missouri Works program, accessible through the DED portal. You can also apply for an indefinite resale certificate here as part of your small business tax exemption strategy.
Montana
There is no state-wide sales tax filing here; however, Montana does offer some tax incentives for biotech.
Nebraska
Apply for a resale exemption certificate through Form 13. The state also allows for small business tax deductions and credits through the Beginning Farmer development program and exemptions on certain agricultural products.
Nevada
Businesses here can avail significant tax credits for film/R&D, along with sales tax abatement of up to 50% for qualified industries.
New Hampshire
New Hampshire has no sales or income tax; however, it does offer tax exemptions on businesses below a certain profit threshold ($92k as of 2025).
New Jersey
Your small business tax exemption strategy here should work with the state’s hiring and manufacturing tax incentives (through the ST-4 exempt use certificate).
New Mexico
New Mexico has a strong program for green tax exemptions and incentives, along with significant job training tax credits. Apply via Form RPD-41335 to get started.
New York
New York’s Excelsior program offers tax credits per job and an indefinite resale exemption certificate. The START-UP NY tax exemption program allows a 10-year tax break for new businesses in certain zones as well.
North Carolina
North Carolina exempts businesses from property tax on personal property and inventory.
North Dakota
There are significant tax credits here for internship programs. Business tax compliance strategies should also account for the state’s tax exemption on building materials.
Ohio
Ohio-based small business tax exemption strategies can leverage the state’s job creation tax credits and exemption on manufacturing repairs.
Oklahoma
The state allows for small business tax deductions related to new jobs (Form 511), expanding businesses (e.g, on construction), and a payroll rebate through Oklahoma’s Quality Jobs program.
Oregon
Oregon offers significant tax exemptions on data center equipment, along with property tax exemptions for businesses in rural zones.
Pennsylvania
The PA Department of Community and Economic Development exempts property and earnings completely for some businesses located in opportunity zones.
Rhode Island
Businesses can use the Commerce RI portal to apply for Qualified Jobs Incentive Credit awards.
South Carolina
SC’s job development credit allows for refunds per job, making it an essential part of any small business tax exemption strategy. The state also has certain exemptions for businesses in the airline industry.
South Dakota
South Dakota allows for property tax exemptions on agricultural land, along with tax credits via annual applications to the Governor’s office through the Revenue Recycling Program.
Tennessee
Businesses can use Tennessee’s FastTrack job credits program to secure savings, along with sales tax exemptions on industrial machinery.
Texas
Texas-based businesses can avail significant franchise tax benefits due to the higher threshold ($2.47 million) in the state.
Utah
Utah offers historic and rural credits, but small businesses will likely be interested in the state’s rural job credit program.
Vermont
Buying machinery in Vermont? The state offers sales tax exemptions on production machinery, provided you can get the exemption certificate (Form S-3) either before or at the time of sale.
Virginia
Small business tax exemption strategies can capitalize on state sales tax exemptions on computer hardware for business use, along with per-job tax credit incentives.
Washington
Washington allows for tax deferrals for construction (public works only). The filing process here starts with contract bids.
West Virginia
West Virginia has a very strong small business tax deduction program for brownfield projects via the state’s Department of Environmental Protection (DEP).
Wisconsin
Business tax compliance strategies here should take advantage of the state’s sales tax exemption on manufacturing equipment via Form S-211.
Wyoming
There is no personal or corporate income tax in Wyoming. The state also offers tax incentives for energy production, along with sales and use tax exemptions for businesses in the manufacturing industry. Exemptions require a certificate from the Wyoming DOR.
Get a Personalized Small Business Tax Exemption Strategy
Ready to save more on taxes? Get a personalized strategy from the top-rated tax consultancy on Trustpilot. Get a free consultation with RJM Tax Exemption today and find out how to maximize your exemptions.
Frequently Asked Questions
Are tax exemptions the same in every state?
No. Tax exemption rules can and do vary significantly state-by-state.
What’s the best way to secure small business tax deductions if I have a multi-state tax nexus?
Working with a trusted tax expert like RJM can help ensure you don’t miss out on valuable exemptions and simplify your tax obligations.
Can I get tax exemptions in multiple states?
Yes, provided you have a nexus and meet exemption requirements in those states.
