A new sales tax exemption on logging equipment will become effective July 1, 2017. Thanks to changes in a tax revenue law signed by Gov. Tom Wolf in July of 2016, equipment used on tree farms is considered farm equipment. That means loggers no longer are required to pay sales taxes on their purchase of equipment that is similar or even identical to tax equipment used at both farms and sawmills.
Under the bill signed into law, there is an exemption that allows loggers to keep a few more dollars in their pockets when they shop for items such as feller bunchers, skidders, harvesters and forwarders.
The state sales tax is 6 percent. Under the new law, a logger who purchases a $50,000 piece of equipment will save $3,000 before even starting up. Smaller purchases also apply and as a result even smaller purchases such as a $5,000 unit will keep $300 in the buyer’s wallet.
Under the new legislation, the key word “timbering” is added to the current definition of farming. Included under the broad heading of timbering are “the business of producing or harvesting trees from forests, woodlots or tree farms for the purpose of commercial production of wood, paper or energy products derived from wood by a company primarily engaged in the business of harvesting trees.”
The law explains what is covered in the Act: “All operations prior to the transport of the harvest product necessary to for removal of timber and forest products from the site, in-field processing of trees into logs or chips, complying with environmental protection and safety requirements applicable to the harvest of forest products, loading of forest products onto highway vehicles for transport to storage or processing facilities and post-harvest site reclamation, including those activities necessary to improve timber growth or ensure natural or direct reforestation of the site.”
Please contact us if you would like more details on how this important change in the law can benefit you and your business.