State Taxes

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NBAA State Aviation Tax Report

The NBAA State Aviation Tax Report is designed to function as an introduction to the vast body of law which constitutes the rules and regulations governing the taxation of general aviation among the fifty states. This report is developed and maintained by the volunteer Members of the NBAA Tax Committee.

For an overview of the information provided in the Report, review the introduction to NBAA's State Aviation Tax Report.

 

Disclaimer:
This report is being provided to NBAA Members for their general information and should not be construed as legal or tax advice on any specific facts or circumstances. You are urged to consult your attorney, accountant or other advisor concerning your own situation and for any specific legal or tax questions you may have.

The web links within the report provide access the version of the statutes and/or regulations that are available on the State's website, which may not be the official versions. It is important that you consult the official versions of the statutes and regulations, relevant case law and rulings before engaging in any aircraft transaction.

State Tax News

Oregon Dedicates $20 Million to Aviation Infrastructure
July 27, 2015
Oregon has dedicated $20 million to aviation infrastructure needs over the next six years, with the passage of House Bill 2075, which was signed by Gov. Kate Brown on July 20. Funding for the program comes from a fuel tax increase, with the avgas tax now at 13 cents per gallon, and the jet fuel tax increasing from 1 to 5 cents per gallon. "Business aircraft operators in Oregon should soon start seeing the benefits of a dedicated aviation fund,: said NBAA Northwest Regional Representative Kristi Ivey. "Support for the state's aviation infrastructure and aviation economic development is a positive development for all aviation interests in Oregon." Read more about the Oregon bill.
NBAA-Led Effort in Texas Levels State Tax Playing Field for Business Aircraft Owners
June 18, 2015
Recent success on aviation tax matters in state legislatures across the country have given aircraft owners and operators something to celebrate. "Sound tax policies that will benefit aviation businesses and aircraft owners have been passed by legislatures in a number of states, including Texas, Nevada, South Carolina and New York," said Scott O'Brien, NBAA’s senior manager of finance and tax policy. "By implementing favorable new tax statutes, these states have shown that they understand the importance of general aviation to their economies." NBAA, working together with local and regional groups, as well as other organizations, played a significant role in the passage of the aviation-friendly legislation. Read more about recent state tax successes.
NBAA-Led Effort in Texas Levels State Tax Playing Field for Business Aircraft Owners
June 17, 2015
Texas Gov. Greg Abbott has signed into law Senate Bill 1396, which provides significant sales and use-tax reforms for general aviation aircraft based in or visiting Texas. After identifying the need to pursue reforms, the National Business Aviation Association (NBAA) and a coalition of stakeholders worked with state legislators and the Texas comptroller of public accounts to emphasize the need for legislation that provides clear guidance and objective standards in the Texas tax code for application of sales and use tax to aircraft owners and operators. Read more about aviation tax reform in Texas.
Nevada Passes Partial Tax Abatement on Aircraft Sales and Services
June 15, 2015
A three-year effort by Nevada aviation groups and industry stakeholders, led by NBAA, culminated recently in Gov. Brian Sandoval signing into law Assembly Bill 161 abating certain tax liabilities for those who own, operate, manufacture and service general aviation aircraft in Nevada. All states bordering Nevada offer varying levels of tax exemptions regarding the sale, operation and repair of GA aircraft. Lack of a similar policy left the state at a competitive disadvantage for attracting new aviation-related businesses, and customers from outside Nevada for existing aviation companies. Read more about the new Nevada tax law.
South Carolina Adopts General Aviation Maintenance Sales Tax Exemption
June 4, 2015
South Carolina has taken an important step in attracting business aviation activity to the state with passage of a sales tax exemption on parts and supplies used in repairing or reconditioning aircraft. In a May letter sent to every South Carolina senator on the Committee on Finance, NBAA noted that the lack of a sales tax exemption on parts and supplies for general aviation aircraft maintenance made South Carolina less competitive than surrounding states, such as Arkansas, Georgia and Ohio, which already have such statutes in place. Gov. Nikki Haley is expected to sign the bill in the coming days. Read more about the South Carolina bill.
Washington State Issues Final 'Tax Avoidance' Rule
April 20, 2015
Washington state's Department of Revenue issued a final rule that provides guidelines and safe harbor provisions for certain aircraft leasing structures and transactions involving use of the sale-for-resale tax exemption. In 2010, the Washington state legislature passed a bill that labeled many business aircraft leasing structures as "tax avoidance" arrangements, which could be subject to increased taxes and penalties. Learn more about the tax avoidance rule.
In Texas, NBAA Advocates in Defense of Workable Aircraft Leasing Structures
April 2, 2015
Earlier this year, a coalition of operators led by NBAA began advocating for legislation in Texas to preserve the long-accepted ‘sale for resale’ exemption for aircraft leasing, and other exemptions. Several other industry coalitions supported additional bills, setting the stage for negotiations between the comptroller’s office, the state legislature and the aviation community. The 2015 session of the Texas legislature ends this summer, and over the next several months, NBAA, business aircraft operators in Texas, along with several law firms, will work with lawmakers, hoping to finalize the legislation before the session ends. Read more about the proposed legislation.
Arkansas Passes Flyaway and Maintenance Tax Exemption
April 2, 2015
To promote the state as a center of aviation and aerospace manufacturing, Arkansas’ legislature recently passed a sales and use-tax exemption for aircraft maintenance, as well as a flyaway exemption for aircraft sales. The bill, which was signed into law by Gov. Asa Hutchinson, was sponsored by Rep. Joe Jett, himself a pilot and the co-chair of the Aviation Caucus in the state's General Assembly. “There’s an aerospace industry here in Arkansas that is first-class, but needs to be promoted beyond the state,” said Jett. “We’ve got to do anything we can to make Arkansas more friendly to business aviation.” Read more about the Arkansas bill.
NBAA Applauds Passage of Aviation Tax Reform in New York
April 1, 2015
NBAA welcomes passage of significant aviation tax reform that will bring jobs and economic development to New York state. Through the budget process, the state Senate and Assembly passed a measure that will exempt general aviation aircraft from the state's sales and use tax. The budget agreement will exempt from New York sales and use tax, sales of general aviation aircraft, and machinery or equipment that is installed on those aircraft beginning on Sept. 1, 2015. The measure defines a general aviation aircraft as any aircraft used in civil aviation that is not a commercial aircraft. Learn more about the New York Budget.
NBAA Files Comments Opposing Changes to Aircraft-Leasing Rules in Texas
Dec. 4, 2014
NBAA has filed comments against proposed tax rules issued by the Texas Comptroller that would significantly change the standards for creating aircraft ownership and operating structures. Under the proposal, a new rule would be created to determine when operators could qualify for the "sale for resale" exemption through aircraft leasing. "There are many legitimate FAA regulatory and risk management reasons why aircraft owners enter into leases, and this proposed rule overlooks those factors," said Scott O'Brien, NBAA senior manager for tax policy. Read more about proposed changes to aircraft leasing rules in Texas.
Know the Facts About Business Aircraft Taxes in Texas
Aug. 7, 2014
State and local taxing authorities across Texas have focused on the aviation industry as a potential source of tax revenue. The state's aviation industry generates billions of dollars annually as measured by gross domestic product – a record $8.4 billion in 2011 – and ranks first in the nation for total direct air transportation sector jobs, with more than 153,000. Further, according to FAA records, more than 29,000 aircraft are registered in Texas, second only to California. Nathan S. Haley, an attorney in the aviation practice group at Dallas-based Shackelford, Melton, McKinley & Norton, LLP, provides an overview of the tax issues that Texas-based business aircraft owners need to be aware of. Read more.
Nevada Supreme Court Rules on Interstate Commerce Exemption
May 9, 2014
A recently published Nevada Supreme Court opinion clarifies the requirements for the application to aircraft of the interstate commerce exemption from Nevada sales and use tax. In Harrah's Operating Company, Inc. v. Nevada Department of Taxation, the court considered a sales tax refund claim made by Harrah's. Chris Younger, a partner with GKG Law who focuses his practice on business aircraft transactions as well as issues relating to federal and state taxation and regulation of business aircraft ownership and operations, wrote about the decision. Read more.
Podcast: Improved NBAA State Aviation Tax Report Now Available
August 20, 2012
The NBAA State Aviation Tax Report has been revamped to make it easier for Members to compare tax rates and policies between all 50 states. "For each of the states every year, our accountants and lawyers on the Tax Committee research the taxability of aircraft ownership in that state," said NBAA Senior Manager of Finance and Tax Policy Scott O'Brien. "In the newly revised Report, we created a standard list of exemptions and evaluated them in each state. We also provide a link to the statute for exemptions in each state." Learn about this aviation tax resource.
State Taxes Impacting Business Aviation – Could Your Aircraft Be Affected?
May 9, 2011
State tax rules can be confusing even to tax attorneys or accountants, because the rules vary among the states, and business aircraft are operated in multiple states. Misconceptions abound regarding the applicability of taxes to aircraft operated for business, and there is no prohibition against "double taxation," so states can impose multiple taxes on aircraft. Leaders of NBAA's Tax Committee presented a webinar, "State Taxes Impacting Business Aviation," now available online. Learn more.
California Fractional Tax Ruled Unconstitutional
December 13, 2010
An Orange County Superior Court judge has ruled that California’s controversial fractional aircraft property tax law is unconstitutional. On November 30, Judge William Monroe held that the imposition of property tax on the managers of fractionally owned aircraft by California Senate Bill 87 (SB 87) is unconstitutional and unlawful. Learn more.
Massachusetts Issues Directive on Taxation of Non-Resident Flightcrew Members
May 5, 2008
The Massachusetts Department of Revenue has issued a directive regarding the personal income taxation of non-residents who are employed as flightcrew members on aircraft based in the state. While there is a federal limitation on state personal income taxation that applies to flightcrew members who perform services on air carrier flights, this limitation does not apply to flights conducted under Part 91. State employers operating aircraft under Part 91 are required to withhold taxes for non-resident flightcrew members. Review the directive.
Update on Washington State Personal Property Tax Assessments
April 30, 2007
NBAA has significant concerns regarding Washington State’s personal property tax regulation and has been working with local Members and the state to address those concerns. The State of Washington Department of Revenue (DOR) has taken the position that personal property tax is due on a percentage of the entire fleet of each Part 135 operator that flies into or out of Washington. The tax is based on the value of the fleet and apportioned based on the charter operator’s aircraft usage in Washington.