Introduction
California’s partial sales and use tax exemption for manufacturers can be a game-changer especially for robotics startups purchasing high-tech equipment.
In this 2025 guide, we explain how eligible businesses can save up to 3.9375% in state-level sales tax, and how to apply it to robotics, AI, and automation equipment.
Relevant Tax Code and Regulations
- Cal. R&TC §6377.1 – Manufacturing and R&D Equipment Exemption
- CDTFA Regulation 1525.4 – Implements the partial exemption
- CDTFA Form CDTFA-230-M – Certificate of Partial Exemption
Key Benefits of the Exemption
- Exempts state portion of sales tax (3.9375%) on qualified purchases
- Applies to robotics, lab tools, automation machinery
- Covers purchases up to $200 million annually
- Applies to startups, manufacturers, and R&D firms with NAICS codes 3111 -3399, 5417
Example: AI Robotics Startup Saving Tax
Example: AutoMechanix Inc., a robotics startup in Palo Alto, buys:
- $800,000 worth of robotic arms
- $100,000 in 3D-printing machines
Without the exemption: ~$35,437.50 in CA state tax owed.
With the exemption: That state portion is waived with the CDTFA-230-M certificate.
Step-by-Step: Claiming the Sales-Tax Exemption in 2025
- Confirm Eligibility
Your startup must:
- Be primarily engaged in manufacturing or R&D (NAICS code matters)
- Have a physical presence in California
- Identify Qualified Property
Robotic systems, 3D printers, AI R&D lab tools, CAD machines, etc. - Complete CDTFA-230-M
Give this partial exemption certificate to the seller at the time of purchase. - Retain Supporting Documents
Invoices, NAICS classification, and purpose of use must be maintained for audit purposes. - Annual Cap Monitoring
Stay below the $200 million purchase cap for exemption eligibility.
Conclusion
Robotics startups in California can dramatically cut costs by using the manufacturing partial sales-tax exemption but you must follow the steps correctly.
From robotic arms to prototyping machines, this is one of the few state-level tech tax breaks still available in 2025.
Call to Action
Purchasing robotics or AI equipment in California? Don’t pay full sales tax.
Book a tax optimization session with Anshul Goyal, CPA, EA, FCA
Anshul helps founders:
- Qualify for CDTFA exemptions
- Prepare CDTFA-230-M forms
- Coordinate NAICS and state classification audits
Get your exemption in place before your next equipment buy:
https://calendly.com/anshulcpa/
Anshul Goyal, CPA, EA, FCA
Anshul brings 15+ years of U.S. and international tax experience. He specializes in helping online sellers, foreign founders, and U.S. residents with IRS and multi-state compliance. Known for his deep knowledge in Shopify and Amazon seller tax strategy, Anshul has helped hundreds of entrepreneurs minimize taxes and scale legally.
Disclaimer
This blog is for informational purposes only and does not constitute legal or tax advice. Please consult a qualified tax professional regarding your individual tax situation.
Top 5 High-Searched FAQs for 2025
1. What is the CDTFA manufacturing sales-tax exemption?
A partial exemption (3.9375%) for qualified manufacturing and R&D equipment purchases.
2. Can a robotics startup qualify for the exemption?
Yes, if NAICS codes and activity meet CDTFA standards.
3. Do I need to register with CDTFA to claim the exemption?
No, just provide Form CDTFA-230-M to your vendor.
4. What items qualify under the exemption?
Machinery, software, prototypes, testing and lab equipment used in R&D or manufacturing.
5. Is the exemption capped annually?
Yes. Limited to $200M in qualified purchases per taxpayer per year.