Information Release

ST 1998-01 - Natural Gas - November, 1998; Updated January 2016

Previously, natural gas was only provided to Ohio consumers (commercial and Residential) by natural gas distribution companies - utilities regulated by the Public Utilities Commission of Ohio (PUCO). Currently, some commercial and residential users can elect to purchase natural gas from natural gas distribution companies or from non-utility suppliers.

When natural gas is purchased from a public utility natural gas distribution company, it is not subject to Ohio sales or use tax. The natural gas distribution company must pay a gross receipts excise tax at the rate of 4.75%, which is recovered in the rates charged for the natural gas.

When natural gas is purchased from a non-utility gas supplier and is delivered through pipes of the natural gas distribution company (the traditional gas utility), the purchase is subject to Ohio sales or use tax, unless the purchaser can claim a statutory exception or exemption (federal, state and local governments; schools; churches; non-profit, charitable organizations; used primarily in a manufacturing operation, used directly in farming, etc.). Non-utility natural gas suppliers do not pay the 4.75% gross receipts excise tax but must collect from the consumer the sales or use taxes that may be due. Charges for delivery of the natural gas by a non-utility gas supplier are subject to sales or use tax even if the delivery charges[1] are stated or billed separately from the amount charged for the natural gas.

[1] Changes to delivery charges are effective on August 1, 2003.  Please see information release  ST 2007-02 - Sales and Use Tax: “Delivery Charges” a Part of the “Price” of a Sale – Issued May, 2007


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