An item qualifies for the exemption, if it meets all of the following requirements:
- Primarily used in the farming or ranching process. This means it’s mostly used for farming or ranching. (See Idaho Code section 63-3607A.)
- Reasonably necessary or essential – you can’t produce your goods without it.
- Directly used or consumed in or during the farming or ranching process – includes any operation reasonably necessary to the total business:
- The farming or ranching process begins when you perform an activity that’s reasonably necessary to your total business.
- The process ends when you remove the product from initial storage, and it’s ready for transportation.
- Tangible personal property – must not become real property
- Allowable by law – must not be specifically excluded from the farming and ranching exemption
Examples of items that qualify:
Examples of items that don’t qualify:
Exempt Purchases — Farming and Ranching
The production exemption guide lists items that are exempt from tax. Qualifying farmers and ranchers can also buy the following items exempt:
- Dry and liquid fertilizer spreaders, combines, discs
- Harvesting and stacking equipment, swathers, harrows, hay balers
- Pesticide applicators, plows, farm wagons
Agricultural irrigation – equipment and supplies
- All irrigation equipment and supplies used directly for agricultural irrigation are exempt. This includes materials that are attached to real property:
- Concrete for irrigation ditches
- Well casings
- Irrigation equipment and supplies don’t qualify if they’re:
- Incidental or only indirectly related to the agricultural irrigation process
- Used to install or maintain the irrigation system
- Used on a golf course
The installer must use Form ST-101 – Sales Tax Resale or Exemption Certificate, to buy qualifying irrigation equipment and supplies exempt.
The equipment can be installed by either the farmer, the rancher, or the contractor.
Milking activities – equipment and supplies
Includes disinfectants used in clean-in-place systems
Seeds and plants for growing crops
Including seedlings and cuttings for orchard trees and grapevines
Fertilizers and pesticides
If used on crops
Feed and vaccines
Farm produce beds
If easily removed from a licensed vehicle (e.g., spud beds)
If used directly and primarily in the farming or ranching process
- Shovels, pitchforks
- Reusable syringes, emasculators
- Branding irons, cattle prods
- Ropes, whips
Note: Hand tools used in maintenance and repair activities are taxable.
Equipment for transporting produce
Equipment mounted on a licensed motor vehicle and used to move farm produce to initial storage can be purchased exempt from sales tax if:
- It can be easily removed from the vehicle,
- It’s separately stated on the vendor’s invoice, and
- The buyer is a qualified farmer or rancher that gives the seller a completed exemption certificate.
Note: The licensed motor vehicle is taxable; only the equipment is exempt.