Utah – Exemptions for Life and Science Research and Development Facilities

SALT Report 1456 – Utah Governor Gary Herbert recently signed a bill that provides a sales and use tax exemption for new or expanding life and science research and development facilities. Effective July 1, 2012, HB 365 will provide an exemption for construction materials, machinery, or equipment and an additional exemption for replacement parts needed to repair machinery and equipment used in a qualified facility.

To qualify as a life science facility in Utah you must fall under one of the following NAICS codes:

  • NAICS Code 33911, Medical Equipment and Supplies Manufacturing,
  • NAICS Code 334510, Electromedical and Electrotherapeutic Apparatus Manufacturing, or
  • NAICS Code 334517, Irradiation Apparatus Manufacturing

If qualified, an exemption will be provided for any construction materials used to construct a new or expand an existing life and science research and development facility. All construction materials must be clearly identified, segregated, and installed or converted into real property.

An additional exemption will be provided for the purchase, lease, or repair of machinery and equipment that:

  • Is used to perform qualified research,
  • Is used in the state of Utah, and
  • Has an economic life of three or more years
Furthermore, any taxpayer meeting the above requirements may claim the following tax credits:
  • A research tax credit of 5% of qualified research expenses for the current taxable year, and
  • A tax credit of 5% for a payment to a qualified organization for basic research for the current taxable year
All life and science research and development facilities must dedicate a minimum of 51% or more of the total area of the facility for research or development work.
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