SUT-141 - Agricultural Exemption - Agricultural Products Derived from Livestock

Raising livestock qualifies as producing an agricultural product. agricultural products grown or produced by a farmer and sold directly by the farmer who is the grower or producer of the agricultural product are not subject to sales tax. If agricultural products are sold in conjunction with agritourism activities, any charges for admission to the agritourism activity are subject to sales tax as a taxable amusement, entertainment, or recreational activity.

For example, a farmer may sell hams, bacon, and sausage that are derived from livestock raised by the farmer, and these products will be exempt from sales tax as long as ingredients that are not produced by the farmer are not added to the livestock products, other than water, salt, sugar, pectin, or preservatives; if the farmer adds any ingredients that it did not produce to its livestock products, other than those listed, the farmer will have to collect sales tax on the sale of their products that contain the non-raised ingredients. The farmer may purchase the salt, sugar cure, or other preservatives that become part of the hams, bacon, and sausage using a resale certificate of exemption.

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