I run a horse breeding and show stable. Which of my supplies, equipment, fencing, buildings, and trailers qualify for Texas's farm/ranch sales tax exemption?

Plain-English summary

A horse breeding and show stable operator sent the Comptroller a long list of items and asked which ones qualify for Texas's farm/ranch sales tax exemption under Tax Code Section 151.316 and Rule 3.296. The letter sorts the operator's items into several distinct categories:

Always exempt, regardless of location: horses and horse feed. Medication prescribed by a veterinarian is also exempt no matter where it's used.

Exempt only if used exclusively on the farm/ranch (loses the exemption if used elsewhere, such as at a horse show): nutritional supplements, salt/mineral block, wormer, medication not prescribed by a veterinarian, fly spray, bandages/leg wraps, and hoof care products.

Never exempt: shampoo and conditioner used to wash and condition horses' coats are taxable no matter where used.

Exempt only if used exclusively on the ranch in the actual production of horses held for sale or on breeding stock (mares/stallions): a long list of equipment — hay racks, feeders, hay nets, salt/mineral block holders, bandage racks, buckets, muck bucket carts, stall guards, sheets/blankets/coolers, fly masks, stall mats, training carts/buggies, blanket and harness hooks, snaps, manure forks, whips/crops/bats, hanging scales, feed scoops, grooming equipment, tack, harness, boots, surcingles, clippers, leather care products, shovels, wheelbarrows, portable pen gates, stall kits, fence chargers and insulators, manure spreaders, automatic waterers, palpation chutes, horse walkers, feed storage bins, breeding hobbles, equine artificial vaginas, fence pliers, wire stretchers, nails, screws, nuts and bolts, tools, tractors, post hole diggers, line levels, disc harrows, and shavings used as stall desiccant. Equipment used at horse shows or other non-ranch locations (even a veterinarian's office) does not qualify.

Special item: AV (artificial insemination) collection bags and liners are exempt if used on a farm or ranch.

Fencing materials split on purpose: lumber and wire used to build fences that contain livestock on a farm or ranch are exempt. Materials used to fence livestock out of a yard are taxable.

Buildings are taxable: lumber and sheet metal used to construct barns and general purpose buildings are subject to sales tax — there is no farm/ranch building-materials exemption here.

Trailers follow a different tax entirely: trailers are taxed under the motor vehicle sales tax, not the limited (general) sales tax. Horse, stock, and utility trailers are exempt from the motor vehicle sales tax at the time of registration if they will be used permanently on the ranch.

What this means for you

Horse breeders, ranchers, and stable operators

Don't assume "farm use" automatically exempts every purchase. The exemption tracks specific, narrow categories — supplies used exclusively on the ranch, equipment used exclusively in breeding/production (not horse shows), and livestock-containment fencing. General-purpose buildings and shampoo/conditioner are taxable regardless of how central they are to your operation.

Anyone constructing barns or outbuildings on agricultural property

Building materials (lumber, sheet metal) for barns and general purpose buildings are taxable — the agricultural exemption does not reach construction materials for structures, even on a working farm or ranch.

Accountants and tax professionals advising agricultural clients

This letter is a useful checklist of the exclusive-use trap: many items on the exempt lists lose their exemption the moment they leave the farm/ranch (e.g., taken to a horse show), even though the same item used on-site would qualify. Also flag the 2011 H.B. 268 registration-number requirement (noted in the disclaimer) for any client relying on this letter's substance today — the taxable/exempt lines here are unchanged, but claiming the exemption now also requires a Comptroller-issued ag/timber registration number.

Common questions

Q: Are horses and horse feed always exempt from Texas sales tax?
A: Yes, regardless of where they're used.

Q: Is medication for horses exempt?
A: If prescribed by a veterinarian, yes, regardless of location. If not prescribed by a vet, it's exempt only when used exclusively on the farm or ranch.

Q: Is horse shampoo exempt?
A: No — shampoo and conditioner are taxable regardless of where they're used.

Q: Is lumber to build a barn exempt as a farm/ranch purchase?
A: No. Lumber and sheet metal used to construct barns and general purpose buildings are subject to sales tax.

Q: Are fencing materials exempt?
A: Only if used to contain livestock on the farm or ranch. Materials used to fence livestock out of a yard are taxable.

Q: Are horse trailers exempt?
A: Horse, stock, and utility trailers are exempt from the motor vehicle sales tax at registration if used permanently on the ranch — trailers are taxed under motor vehicle tax rules, not the general sales tax.

Q: Does anything about this 1999 letter's substance change today?
A: The taxable/exempt lines described here haven't changed, but since 2012, anyone claiming this agricultural exemption must also hold a Comptroller-issued agricultural/timber registration number under H.B. 268 (2011).

Q: Can I rely on this letter for my own farm or ranch purchases?
A: No. This opinion is rendered based on the facts presented, and if there are additional or different facts, the opinion may change; it can be relied on only by the taxpayer it was issued to.

Citations and references

Statutes and rules:

• Tex. Tax Code § 151.316 (agricultural exemption)
• 34 Tex. Admin. Code Rule 3.296 (agriculture, animal life, feed, seed, plants and fertilizer)
• H.B. 268, 82nd Reg. Legislative Session (2011) — added the agricultural/timber registration-number requirement effective 2012 (noted via STAR ALERT; a later procedural add-on, not part of this 1999 letter's original holding)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9903288L

Original ruling text

ALERT: This document may be affected by changes to the Tax Code which was amended by H.B. 268, 82nd Reg. Legislative Session, 2011. The amendment required persons claiming a sales tax exemption for certain agricultural and timber products to apply for and provide a registration number issued by the Comptroller, effective 01/01/2012.

March 29, 1999

Dear Mr. **:

Thank you for your recent letter requesting information on the tax treatment of
items used at a horse breeding and show stable. Responses to this letter will
be based on Tax Code Section 151.316 and Rule 3.296, copies of which are
enclosed with this response.

Horses and horse feed are exempt from sales tax regardless of where they are
used. However, many items are exempt from tax only if used exclusively on a
farm or ranch and would loose the exemption if used at another location such as
a horse show. These include medications, tonics, restoratives, or other
therapeutic preparations. Medication prescribed by a veterinarian is exempt
regardless of where it is used. The following items from your list fall into
this category:

nutritional supplements
salt/mineral block
wormer
medication not prescribed by a veterinarian
fly spray
bandages/leg wraps, and
hoof care products

Shampoo and conditioner used to wash and condition horses' coats do not qualify
for exemption.

Items of equipment that are listed as exempt must be used exclusively on the
ranch in the production of horses held for sale in the regular course of
business or used on mares or stallions used as breeding stock. Equipment used
at horse shows not occurring on a farm or ranch or other non-ranch locations
(such as a veterinarians' office) will not qualify for exemption. The
following items from your list fall into this category:

hay rack
feeder
hay net
salt/mineral block holder
bandage rack
buckets
muck bucket cart
stall guard
sheets/blankets/coolers
fly mask
stall mat
horse cart/buggy (used for training rather than pleasure)
blanket holder
harness hook
snaps
manure forks
whips/crops/bats
hanging scale
feed scoop
grooming equipment
tack
harness
boots (bell, splint, etc.)
surcingle
clippers
leather care products
shovel
wheel barrow
gates (portable pen components)
stall kits
fence chargers
insulators (for electric fence)
manure spreader
automatic waterer
palpation chute
horse walker
feed storage bin
breeding hobbles
equine artificial vaginas
fence pliers and staple puller
wire stretcher
nails
screws
nuts and bolts
tools
tractor
post hole digger
line level
disc harrow
shavings (used in stall as desiccants)

AV collection bags and AV liners used in collection and transport of sperm
qualify for exemption if used on a farm or ranch.

Lumber and wire used to construct fences on a farm or ranch to contain
livestock qualify for exemption. Materials used to fence livestock out of a
yard are subject to sales tax.

Lumber and sheet metal used to construct barns and general purpose buildings
are subject to sales tax.

Trailers are taxed under the motor vehicle sales tax rather than the limited
sales tax. Horse, stock, and utility trailers are exempt from the motor
vehicle sales tax at the time of registration if they will be used permanently
on your ranch.

This opinion is rendered based on the facts presented. If there are additional
or different facts, the opinion may change.

You may call me toll free at 1-800-531-5441, ext. 3-4680. The direct line is
512/463-4680. You may also write to Tax Policy, Comptroller of Public
Accounts. The email address is .

Sincerely,

Al Van Allen
Tax Policy Division