Introduction
Texas wants to keep manufacturing intelligent and lean—and that’s where the Texas Manufacturing Sales Tax Exemption under §151.318 comes into play.
For robotics and AI startups investing in machines, sensors, and embedded systems, understanding this exemption can unlock major cash flow benefits in 2025.
Texas Code References
- Texas Tax Code §151.318 – Manufacturing exemption
- Texas Administrative Code §3.300 – Details on qualifying equipment
- Texas Comptroller Rule 94-0.7 – Interpretive guidance on robotic components
What Qualifies for the Manufacturing Exemption?
Businesses engaged in fabricating, processing, or manufacturing tangible personal property for sale can claim sales and use tax exemptions on:
- Machinery and equipment directly used in manufacturing
- Control panels, robotic arms, conveyor systems
- AI chips or embedded systems if integrated into production equipment
- Software that operates or monitors exempt equipment
What Doesn’t Qualify?
- Office supplies or admin computers
- Equipment used for R&D but not in production
- Real property improvements (buildings)
Example: AI Robotics Firm in Austin
Example: SynBotix, an AI-powered robotics firm, manufactures warehouse bots. In 2025, they:
- Purchase $400,000 in sensors, robotic arms, and PLCs
- Integrate AI processors for real-time decision-making
If SynBotix provides documentation proving these are used in actual production, they can claim an exemption—saving 8.25% in sales tax (approx. $33,000).
Step-by-Step: Claiming the Exemption in 2025
- Determine Eligibility
Are you manufacturing or assembling tangible goods for sale? - Identify Qualifying Equipment
Ensure items are used directly in production—not just R&D or admin. - Complete Form 01-339
Texas Sales and Use Tax Exemption Certificate—provide to vendors. - Retain Documentation
Keep records showing operational use, installation photos, invoices, etc. - Prepare for Audit Readiness
The Comptroller often audits high-dollar exemptions.
Conclusion
AI and robotics companies building in Texas should leverage §151.318 to reduce taxable purchases.
The manufacturing exemption is one of the most valuable tools for scaling tech hardware with reduced upfront costs.
Call to Action
Planning hardware purchases in 2025?
Book a consultation with Anshul Goyal, CPA, EA, FCA to:
- Identify qualifying equipment under §151.318
- Complete proper exemption certificates
- Prepare compliance docs for potential audits
Build smarter. Pay less. Scale faster.
https://calendly.com/anshulcpa/
About Our CPA
Anshul Goyal, CPA, EA, FCA
Anshul brings 15+ years of U.S. and international tax experience. He specializes in helping online sellers, foreign founders, and U.S. residents with IRS and multi-state compliance. Known for his deep knowledge in Shopify and Amazon seller tax strategy, Anshul has helped hundreds of entrepreneurs minimize taxes and scale legally.
Disclaimer
This blog is for informational purposes only and does not constitute legal or tax advice. Please consult a qualified tax professional regarding your individual tax situation.
Top 5 High-Searched FAQs (2025)
1. What is the Texas manufacturing exemption?
It allows producers to avoid sales tax on equipment used directly in manufacturing.
2. Does software qualify?
Yes, if it operates or monitors production machinery.
3. Can AI and robotics firms claim it?
Yes, if the hardware is used to make goods—not for R&D or admin use.
4. Do we need to file a form?
Yes, submit Form 01-339 to your vendor for the exemption.
5. Is this exemption audited?
Yes. Keep clear documentation of usage and installation.