State and local sales taxes are exempted on certain types of purchases, including machinery and equipment used in the manufacturing process; material handling equipment used in the warehousing of inventory that is primarily (51 percent or greater) distributed to retail operations associated with the warehouse operator; and equipment used for research and development purposes. Additionally, inventory, which is taxed at the local level as tangible personal property, can be exempt from tax if located in an established Foreign Trade Zone. Inventory is also exempt from taxation if qualified for the Warehouse Inventory Tax Exemption, whereby inventory that is received from outside Ohio, held “for storage only” (i.e. no value is added to the inventory while stored in Ohio), and distributed outside Ohio, is completely exempted from local tangible personal property tax.

JRTC Guidelines Sales and Inventory Tax Exemptions