Ohio Sales Tax Exemptions 2026: Complete List

Quick answer: Ohio exempts unprepared groceries, prescription drugs, farm equipment, manufacturing machinery, and items purchased for resale with a valid STEC certificate. All other tangible personal property is taxable at your county's combined rate (6.50%–8.00%).

Every Ohio business that has handed a supplier a STEC B certificate and never thought about it again is sitting on a future audit problem. Ohio's exemptions are real, valuable, and widely abused in both directions — businesses claim exemptions they don't qualify for and miss six-figure exemptions they absolutely do. This guide covers every major 2026 exemption, the certificate mistakes that cause the most audit fallout, and the manufacturing loophole most accountants forget to claim.

1. Food and Groceries

Unprepared food sold for off-premises consumption is exempt statewide. The typical grocery run qualifies:

• Produce, meat, dairy, bread, and packaged foods
• Baby formula and infant food
• Food sold in sealed packages for home preparation

Not exempt: Dine-in restaurant meals, soft drinks (sweetened beverages including sports drinks and energy drinks), alcohol, and dietary supplements are taxable regardless of where they are consumed.

See the full food rules in Is Food Taxable in Ohio? or the dine-in vs. takeout breakdown in the Ohio restaurant sales tax guide.

2. Prescription Drugs and Medical Items

Ohio exempts:

• Prescription drugs (any drug that legally requires a prescription)
• Insulin, needles, and syringes used to administer insulin
• Prosthetic devices
• Durable medical equipment prescribed by a licensed practitioner — wheelchairs, CPAP machines, walkers
• Hearing aids and eyeglasses

Over-the-counter medications, vitamins, and non-prescription health supplements are generally taxable.

3. Farm and Agricultural Supplies

Ohio provides broad exemptions for active farming operations:

• Seeds, plants, and fertilizer used in agricultural production
• Farm machinery, equipment, and repair parts
• Livestock, poultry, and the feed used to raise them
• Pesticides and herbicides used on crops
• Containers and packaging used to sell agricultural products

The exemption applies to items used directly in agricultural production. Equipment used on a farm but not for actual production — such as a personal pickup truck — does not qualify.

4. Manufacturing and Industrial Production

Tangible personal property used directly in Ohio manufacturing or production is exempt under R.C. 5739.02(B)(15):

• Manufacturing machinery and equipment
• Raw materials incorporated into the finished product
• Packaging materials that become part of the final product sold to customers

Taxability Flowchart

graph TD
    A[Transaction] --> B{Is it Tangible Personal Property?}
    B -->|Yes| C{Is there a specific exemption?}
    C -->|Yes| D[Exempt]
    C -->|No| E[Taxable]
    B -->|No| F{Is it an enumerated service?}
    F -->|Yes| E
    F -->|No| D

The Trench Truth: Many businesses misuse exemption certificates. A legitimate use is a manufacturing plant buying raw steel that will be physically melted down and turned into a machine part for resale. An illegitimate use is a contractor using their business's exemption certificate to buy tools (like drills or saws) or office furniture. The tools don't become part of the final product being resold, and they aren't used directly in the manufacturing process. That is tax evasion, plain and simple, and it gets caught easily during routine audits of vendor records.

The conveyor belt gray area: Conveyors that move product during the production process (intra-production) are generally exempt. Conveyors that move raw materials to the line before production starts, or finished goods away from the line after it ends, fall into contested territory — ODT has audited both. If you have a multi-zone conveyor system, get the exemption documented before a field auditor decides for you.

Office supplies, maintenance tools, and items used before or after the production process are taxable.

5. Resale — and the STEC B Misuse Problem

If you are buying goods to resell to customers — not for your own use — you can purchase them tax-free by giving your supplier a completed Ohio exemption certificate.

Common Ohio exemption certificate forms:

• STEC B — blanket certificate, covers ongoing purchases from one supplier
• STEC U — unit certificate, covers a single transaction
• STEC SST — Streamlined Sales Tax certificate, accepted by Ohio and other member states

Resale certificates are only valid for items that will be resold in the same or similar form. They do not cover supplies your business consumes internally.

Here is the problem: ODT auditors specifically target STEC B blanket certificates during audits. If they pull your purchase records and find that you bought office chairs, printer paper, or cleaning supplies from a supplier under a STEC B — even once — they can disqualify the entire blanket certificate for that vendor. Every purchase under that certificate, for the full audit window, becomes taxable. The resulting liability, plus penalties, typically far exceeds whatever you saved on the misused items.

The fix is straightforward: issue separate purchase orders for exempt resale items and taxable business supplies. Never mix them under the same blanket cert.

6. Ohio Sales Tax Holiday

Ohio holds an annual back-to-school sales tax holiday in early August. During the holiday, the following qualify for exemption with no purchase price limit:

• Clothing and footwear
• School supplies
• School instructional materials

The 2026 holiday runs August 7–9. Full details and price thresholds are in the Ohio Sales Tax Holiday 2026 guide.

7. Government and Non-Profit Purchases

The following are generally exempt when purchasing for their qualifying purpose:

• U.S. government and Ohio state agencies
• Political subdivisions — counties, cities, school districts, townships
• Qualifying Ohio non-profit organizations

Important: Federal 501(c)(3) status alone is not sufficient for Ohio sales tax exemption. Ohio has its own qualification process through ODT. Purchases must be paid with the organization's own funds and used for the exempt purpose. Personal purchases by employees — even if later reimbursed — are taxable.

8. Other Notable Exemptions

The #1 False Assumption: Business Expense ≠ Sales Tax Exempt

This misconception creates real audit problems for small Ohio businesses.

A purchase that is deductible as a business expense on your federal taxes has nothing to do with whether it is exempt from Ohio sales tax. These are completely separate legal frameworks.

Common examples that are always taxable — regardless of how you categorize them on your tax return:

• SaaS and software subscriptions — taxable in Ohio if the vendor does business in the state
• Office furniture — fully taxable
• Computers and electronics — taxable (not used directly in manufacturing)
• Company vehicles — subject to Ohio's motor vehicle sales tax
• Consulting and professional services — see are services taxed in Ohio for the rules on labor vs. product charges

Telling your CPA "I wrote it off as a business expense" will not protect you in a sales tax audit. If you bought something taxable in Ohio and the vendor didn't charge tax, you owe Ohio use tax on it.

The Out-of-State Vendor Trap: Use Tax

This is the scenario most Ohio business owners do not know about until they get a notice.

You order from a vendor in another state. The vendor ships to your Ohio location and does not charge Ohio sales tax — either because they're not registered in Ohio or made an error. The invoice looks clean. You are still liable.

Ohio use tax applies to the storage, use, or consumption in Ohio of tangible personal property purchased outside Ohio if Ohio sales tax was not paid. The rate is identical to the sales tax rate in your county.

ODT cross-references use tax compliance during business audits. If your records show out-of-state vendor purchases with no tax collected and no use tax reported, that becomes a line-item liability.

If you have been buying from out-of-state vendors, use the Ohio use tax calculator to estimate what you may owe, then consult a tax professional before self-reporting. A voluntary disclosure through ODT generally results in reduced penalties.

How to Claim an Exemption

Exemptions do not apply automatically. The buyer must provide the seller with a properly completed exemption certificate before the sale. The seller keeps the certificate on file as documentation.

Steps for buyers:

1. Determine which exemption applies to your purchase
2. Complete the correct form (STEC B for ongoing supplier relationships, STEC U for one-time purchases)
3. Provide the certificate to the seller before or at the time of purchase
4. Keep a copy for your own records
5. Do not use a blanket STEC B to cover mixed-purpose purchases

A seller who accepts a certificate in good faith — and the buyer later misuses it — is not liable for the uncollected tax. However, sellers who accept obviously incorrect or incomplete certificates may be held liable.

Not sure what your tax obligation looks like on a non-exempt purchase? Check rates by county at Ohio Sales Tax by County or calculate the exact amount below.

Frequently Asked Questions

Are groceries exempt from Ohio sales tax? Yes. Unprepared food sold for off-premises consumption is fully exempt. This covers produce, meat, dairy, packaged foods, and bread. Soft drinks, alcohol, and dine-in restaurant meals are taxable. See Is Food Taxable in Ohio? for the full rules.

Are prescription drugs exempt from Ohio sales tax? Yes. All prescription drugs are fully exempt. Over-the-counter medications and health supplements are generally taxable.

Is clothing exempt from Ohio sales tax? No, except during the annual Ohio sales tax holiday in August. Outside of the holiday window, clothing and footwear are taxable at your county's combined rate.

Do non-profits pay sales tax in Ohio? Not automatically. Non-profits must apply for and receive an Ohio sales tax exemption to make tax-free purchases. Federal 501(c)(3) status alone is not sufficient — Ohio has its own qualification process.

What is an Ohio exemption certificate? An Ohio exemption certificate is a document the buyer gives to the seller to document a valid tax exemption. The seller must retain it on file. The most common forms are STEC B (blanket, for ongoing supplier relationships) and STEC U (unit, for a single purchase).

Is farm equipment exempt from Ohio sales tax? Yes. Farm machinery, equipment, and parts used directly in agricultural production are exempt from Ohio sales tax. The buyer must provide an exemption certificate to the seller.

Is packaging equipment exempt from Ohio sales tax? Yes, if it is part of the production process leading to the final saleable unit. Shrink-wrap machines, pallet wrappers, and boxing lines qualify under R.C. 5739.02(B)(15). Many manufacturers miss this and overpay for years.

Sources

• Ohio Department of Taxation — Exemptions Overview
• Ohio Revised Code § 5739.02 — Taxable Sales and Exemptions
• Ohio Exemption Certificate Forms (STEC B, STEC U)
• Ohio Use Tax — R.C. 5741.02
• ODT Information Release ST 2004-02 — Manufacturing Exemption