One of Oklahoma Farm Bureau’s very first policy priorities in 1942, the state sales tax exemption on agricultural inputs is a crucial business tool for Oklahoma farmers and ranchers. Nearly all items used in production agriculture are exempt from sales tax in the state including seed, feed, fertilizer, livestock pharmaceuticals and farm machinery.
Why an exemption is needed
Oklahoma farmers and ranchers purchase a wide array of inputs to grow and raise the agricultural products our world relies upon. Much like manufacturers, agricultural producers purchase these inputs – often in bulk – to create value using natural resources and their own labor.
Oklahoma agricultural producers take on tremendous risk to raise the healthy and affordable food and fiber on which we depend. The state agriculture sales tax exemption ensures the costly inputs needed can be purchased without the unnecessary burden of a sales tax. Instead, the products Oklahoma agriculturalists produce go on to be taxed at the retail level when consumers purchase food and other items using farm and ranch products.
A level playing field
Our neighboring states provide sales tax exemptions to farmers and ranchers. Oklahoma’s exemption maintains a level playing field for our agricultural producers, ensuring our farmers and ranchers can compete on a national – and international – level.
Using the exemption
To use the exemption, farmers and ranchers must obtain a permit card issued by the Oklahoma Tax Commission and use it when they purchase tax-exempt items for their farm or ranch. Any person who misuses their permit is subject to a $500 penalty from the tax commission per instance.
A history of the agriculture sales tax exemption
Removing agricultural inputs from state sales tax has been a longstanding policy position of Oklahoma Farm Bureau. The organization’s first efforts to gain the exemption were in 1943.
Exemptions for individual products were won over decades starting in 1957, when sales tax exemptions for feeds and the trade value of used machinery was granted. Through the years, additional piecemeal exemptions were added for agricultural inputs such as fertilizer, farm machinery and repair parts.
Finally, in 1978 after decades of grassroots legislative advocacy, OKFB secured a blanket exemption for products purchased for the production or storage of agricultural products.
OKFB continues its work to preserve the agricultural sales tax exemption that helps its family farm and ranch members continue their work caring for the land, caring for their animals and providing for us all.