Were materials, equipment, and supplies used by a Texas manufacturer to develop a prototype exempt from sales tax under this 1987 ruling?

Plain-English summary

The Texas Comptroller's 1987 answer was that materials, equipment, and supplies a manufacturer used in research, development, selling, or distributing manufactured goods were taxable to the manufacturer. Materials used to make a sample item were also taxable.

STAR now places two alerts above the historical letter. One describes an exemption for certain depreciable property used in qualified research that was added to Section 151.3182 in 2013. The newer alert says Senate Bill 2206 repealed Section 151.3182 effective January 1, 2026.

What this means for you

The 1987 treatment cannot be applied as a current R&D rule without accounting for the later enactment and repeal displayed by STAR. The historical holding is useful for understanding the old manufacturing rule, but current purchases require a current-law analysis.

Common questions

Were prototype-development materials taxable under the 1987 letter? Yes.

Were equipment and supplies used in research and development taxable? Yes, under the rule cited in the 1987 letter.

Were materials used to make a sample taxable? Yes.

What does STAR say about the later R&D exemption? It says Section 151.3182 was repealed effective January 1, 2026.

Citations and references

• Tex. Tax Code § 151.3182 — the later R&D exemption provision that STAR says was repealed effective January 1, 2026.
• Comptroller Rule 3.300(b)(4) and (c)(1) — cited by the 1987 letter for manufacturing, custom manufacturing, fabricating, and processing.
• Comptroller Rule 3.340 — identified in STAR's alert for details about the later qualified-research exemption.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8703L0801D05

Original ruling text

ALERT: Senate Bill 2206, 89th Legislative Session, repeals Tax Code Section 151.3182 relating to the exemption for certain property used in research and development activities. Effective 01/01/2026.

ALERT: An exemption for certain depreciable property used in "qualified research", as added to Section 151.3182 by the 83rd (2013) Legislative Session (H.B.800), may be available. See Rule 3.340 for additional details.

COMPTROLLER OF PUBLIC ACCOUNTS

STATE OF TEXAS

AUSTIN, 78774

BOB BULLOCK

Comptroller March 20, 1987

Dear *****:

Thank you for your letter of March 11, 1987 concerning the taxability of

materials used to develop a prototype.

Materials, equipment and supplies used in research, development, selling

or

distributing manufactured goods are taxable to the manufacturer. Also,

the

materials used to make a sample of an item are taxable. Please refer to

Sections (b)(4) and (c)(1) of the enclosed Rule 3.300, Manufacturing;

Custom

Manufacturing; Fabricating; Processing.

This opinion is based on the facts presented. If there are additional or

different facts, the opinion may change.

If you have any questions or need more information, please call me at

1-800-252-5555 toll free from anywhere in Texas. The regular number is

512/463-4600. You may write me at the Tax Administration Division.

Sincerely,

Julie Pesl

Tax Policy Section

Tax Administration Division