Ohio Farm Sales Tax Exemption: Agricultural Rules & Form STEC-U

Quick answer: Under Ohio Revised Code § 5739.02(B)(17), items purchased for direct use in the production of agricultural products for sale are exempt from Ohio sales and use tax. To claim the exemption, commercial farmers present a properly completed Form STEC-U or Form STEC-B to their farm equipment, seed, or fertilizer dealer. General maintenance items, residential supplies, and equipment used after harvest do not qualify.

Ohio is home to over 75,000 family farms producing soybeans, corn, dairy, poultry, and specialty crops. While the agricultural exemption is broad, it is also heavily scrutinized by the Ohio Department of Taxation (ODT). Auditors regularly audit farm supply dealers and penalize growers who confuse personal rural acreage with commercial agricultural production.

Here is the exact boundary between tax-free agricultural inputs and taxable farm expenditures, how to use Form STEC-U correctly, and how farm stand retail sales must be handled.

The Statutory Standard: "Used Directly in Agricultural Production for Sale"

Ohio Revised Code (R.C.) § 5739.02(B)(17) and § 5739.01(E) exempt:

"Sales to persons engaged in farming, agriculture, horticulture, or floriculture, of tangible personal property for use or consumption directly in the production by farming, agriculture, horticulture, or floriculture of other tangible personal property for sale..."

Notice the two mandatory legal prongs in this statute:

1. For Sale: The agricultural goods produced must be intended for commercial sale. Hobby farms, personal vegetable gardens, and private pleasure horse stables do not qualify for the exemption.
2. Used Directly: The equipment or item must have an active, physical role in the primary production cycle—from soil preparation to harvest.

graph TD
    A[Farm Purchase] --> B{Commercial Farm Producing for Sale?}
    B -->|No - Hobby / Personal| C[Fully Taxable at Local Combined Rate]
    B -->|Yes| D{Used DIRECTLY in Production Cycle?}
    D -->|Yes - Tractors, Seed, Fertilizer, Harvesters| E[100% Tax-Exempt via Form STEC-U / STEC-B]
    D -->|No - Lawn Mowers, Shop Tools, Personal ATVs| C

What Qualifies as Tax-Exempt vs. Taxable?

The line between exempt and taxable farm purchases is strictly enforced. The table below outlines how ODT classifies common farm expenditures:

The Trench Truth: All-terrain vehicles (ATVs) and utility task vehicles (UTVs) are the number one audit red flag on Ohio farms. If an ATV is used 70% to check cattle fences and 30% for weekend trail riding or hunting, ODT considers it dual-use. Unless the vehicle is used exclusively and directly in farming operations, auditors routinely assess back taxes on the entire purchase price.

Current Ohio Rates When Purchasing Taxable Farm Goods

When purchasing taxable equipment, hand tools, or supplies, farmers pay the combined state (5.75%) and county sales tax rate at the equipment dealer or delivery point:

Check any farm supply retailer's local tax rate with our Ohio ZIP Code Sales Tax Calculator.

How to Claim the Exemption: Form STEC-U vs. STEC-B

To buy qualifying farm equipment and inputs tax-free, Ohio farmers do not receive a special state ID card or farm tax number. Instead, you sign an official ODT exemption certificate:

1. Form STEC-U (Unit Exemption Certificate): Used for one-time, specific asset purchases (such as purchasing a new combine or grain drill from a machinery dealership).
2. Form STEC-B (Sales and Use Tax Blanket Exemption Certificate): Used for recurring purchases from a single supplier (such as an ongoing commercial feed, fertilizer, or seed account).

How to Fill Out Form STEC-U / STEC-B for Farming:

• Vendor Name: Enter the farm equipment dealer or input distributor.
• Purchaser Information: Enter your commercial farm or agricultural business name, address, and Federal Employer Identification Number (FEIN) or Vendor's License number.
• Statutory Reason: Check the box or write: "Used directly in agricultural production of tangible personal property for sale under R.C. 5739.02(B)(17)."
• Signature: Must be signed and dated by an authorized farm owner or officer.

Blanket certificates remain valid indefinitely until revoked in writing or until the business entity changes, but best practice is to provide an updated certificate every three to four years.

Farm Stands & Direct-to-Consumer Produce Sales

Many Ohio growers sell fresh produce, sweet corn, honey, and meat directly to consumers through roadside farm stands, pick-your-own patches, or local farmers markets.

Under the Ohio Constitution (Article XII, Section 13) and R.C. § 5739.02(B)(1), food sold for off-premises consumption is exempt from sales tax.

• Exempt: Fresh sweet corn, apples, pumpkins, raw honey, unpasteurized cider in sealed jugs, fresh eggs, raw beef cuts.
• Taxable: Prepared sandwiches, cups of hot coffee, food eaten at picnic tables on the farm, decorative gourds and flowers, carved Halloween crafts, and corn maze admissions.

If you sell any non-food items or prepared foods, you must register for an Ohio Transient Vendor's License or Regular Vendor's License and collect your local county sales tax rate.

Filing Requirements for Registered Farms

Farms that hold a vendor's license to collect sales tax on retail products or agritourism activities must file returns electronically via the Ohio Business Gateway.

• Filing Deadline: Sales tax returns (Form UST-1) are due by the 23rd of the month following each reporting period (or next business day if on a weekend/holiday).
• Mandatory Zero Returns: Even if your farm stand is closed from December through April, you must file zero returns for each inactive period under R.C. § 5739.12(D). Failing to file triggers an automatic $50 late filing forfeiture.

Need to verify due dates or calculate your next return deadline? Check the Ohio Sales Tax Filing Calendar or get automated deadline alerts with Ohio Sales Tax Pro.

Frequently Asked Questions

Are farmers exempt from sales tax in Ohio? Yes, but only on tangible personal property used directly in the production of agricultural products for sale. Ohio Revised Code § 5739.02(B)(17) provides an exemption for farming equipment, seed, fertilizer, and feed, but not for general maintenance items or residential property.

What form does an Ohio farmer use to buy equipment tax-free? Farmers use Form STEC-U (Unit Exemption Certificate) for single purchases or Form STEC-B (Blanket Exemption Certificate) for ongoing vendor accounts, checking the statutory box for agricultural production.

Are farm tractors taxable in Ohio? No. Tractors, combines, planters, and tillers used directly in field preparation, planting, cultivating, and harvesting commercial crops are exempt from Ohio sales and use tax.

Do farm stands have to collect sales tax in Ohio? Unprepared produce and food sold for off-premises consumption (such as fresh corn, apples, or eggs) is exempt from Ohio sales tax. However, ornamental items, flowers, cider, or ready-to-eat bakery goods eaten on-site require an active vendor's license and sales tax collection.

Is fencing for livestock exempt from Ohio sales tax? Fencing materials are generally treated as permanent real property improvements unless specifically designed as temporary agricultural fixtures. If installed by a contractor, the contractor must pay tax on the fencing materials upon purchase.

Sources

• Ohio Revised Code § 5739.02 — Exemptions from State Sales Tax
• Ohio Revised Code § 5739.01 — Retail Sales and Agricultural Definitions
• Ohio Department of Taxation — Agriculture Information Release ST 1993-03
• Form STEC-U — Unit Exemption Certificate
• Form STEC-B — Sales and Use Tax Blanket Exemption Certificate