Aircraft Ownership & State Taxes

by Kyle Lewis
Regional Manager / Government Affairs & Airport Advocacy / Great Lakes / Aircraft Owners & Pilots Association
Published in Midwest Flyer – June/July 2019 issue

The cost of aircraft ownership runs much deeper than the upfront purchase cost. There are multiple factors to consider aside from the price paid, such as hangar rent, insurance, taxes, fuel consumption, annual inspections, etc.  In general terms, many of those costs are somewhat fixed and don’t change much from state to state except…taxes. State taxes, such as “sales tax,” can vary depending on where and how you take delivery of an aircraft, whether it was a private sale or purchased via a broker or dealer. Some taxes are based on value or gross weight. Another sometimes overlooked situation is the collection of a “use tax” if you construct an airplane from a kit or raw materials. These “use taxes” usually coincide with a formula based on value.

This column would be tens, possibly hundreds of pages long if I went into detail on each state. Even states across the Great Lakes Region vary in terms of tax law. In Ohio, for example, if an aircraft is registered in Ohio and sold to a Ohio resident, there is zero sales tax owed. If I (as an Ohio resident) build an aircraft from a kit, when completed and registered as an aircraft in the Buckeye State, I owe Ohio use tax! NUTS! Some states have a “fly-away” rule. This is an interesting scenario. For instance, you may purchase an aircraft in Minnesota and take the aircraft back home to Wisconsin to be based, and there is no sales tax due to Minnesota. The catch is, states usually put a time limit to move the aircraft out of state, which can vary. Again, you will need to research each individual scenario as taxes may be due in your home state when the aircraft is registered. It is not uncommon for state tax agencies to track aircraft movements at airports to determine the “home base” of an aircraft. I have heard stories of inspectors walking ramps and collecting tail numbers in a database, and owner/operators being hit with a tax bill based on the amount of time the aircraft spends in a specific state.

AOPA has a plethora of resources available on state taxes. In fact, on our state advocacy webpage (https://www.aopa.org/advocacy/state-advocacy), there is a brief summary for each state that highlights the tax situations. For specific questions, consult with an appropriate tax attorney in your home state for ultimate guidance. AOPA offers these services under our Pilot Protection Services, which has a network of over 750 attorneys across all 50 states. Bottom line, spend some time during the purchase process and research what taxes may impact the sale, purchase, or registration of an aircraft.

AOPA is still investing in the Airport Support Network (ASN), and the program is just as relevant now as when it began in the mid-1990s. The ASN program mission is still the same, promote, protect, and defend America’s airports. As the day-to-day operations now fall under each regional manager, the connection to the whole of AOPA is very strong. At each of our regional fly-ins, and at EAA AirVenture Oshkosh, AOPA staff will be presenting a new seminar called “Will Your Airport Still Be Here Tomorrow.” The presentation is designed to give an overview of how airports are funded, operate, and what each member can do to be diligent and educated when an airport becomes under threat of closure or encroachment that will impact its sustainability. Think of this as “Airports 101.” Mike Ginter, AOPA’s Vice President of Airports and State Advocacy, presented it for the first time at Sun ‘n Fun in April of 2019. It was one of the highest attended seminars of the week, and as a result, AOPA added a few more ASN volunteers to the program. The seminar is open to anyone, and we encourage anyone interested to attend, not just our current volunteer force.

Legislative Update

North Dakota legislators passed a bill recently that will have positive impact on aviation. House Bill 1066, dubbed “Operation Prairie Dog,” implements a funding stream for transportation infrastructure statewide. The nearly $100 million appropriations, based on forecasted oil tax revenues, will be put to use across all sectors of transportation infrastructure, with aviation-related spending at up to $20 million each biennium. North Dakota Aeronautics Commission Director Kyle Wanner stated, “North Dakota fully understands the benefits of smart and efficient infrastructure, as well as the economic impact and heightened standard of living that our airports provide to their communities. We are excited to see that our state leaders have worked out a solution to establish a new airport infrastructure fund with the intent that it will allow the state to provide consistent, long-term airport infrastructure grant funding.” Governor Doug Burgum signed the bill in late March of 2019.

As the summer months bring aviating opportunities, please consider attending AOPA Regional Fly-Ins in Livermore, California, June 21 -22, or Tullahoma, Tennessee, September 13-14, 2019. These events have been expanded to a full two-day format, and feature excellent programs and hospitable venues for attendees. Our events staff are in the process of selecting 2020 fly-in airports and the announcement should be made in late summer or early fall. If you have an airport you would like us to consider for 2021 and beyond, we encourage the airport sponsor to complete the AOPA Fly-In “Request for Proposal” packet that can be found on our website. It is truly a wonderful experience, not only for the airport, but also for the surrounding community.

It is always a privilege to be able to communicate my work with you and as always, please do not hesitate to contact me with questions or concerns (kyle.lewis@aopa.org).

Share and Enjoy:
  • Print
  • Digg
  • StumbleUpon
  • RSS
  • Facebook
  • MySpace
  • Reddit
This entry was posted in AOPA Great Lakes Report, Columns, Columns, June/July 2019 and tagged , , , , , . Bookmark the permalink.

Leave a Reply