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Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts

taxes

AIRCRAFT AND TEXAS SALES AND USE TAX

Airplanes, helicopters and FAA-approved flight simulators are considered aircraft, while other flying devices, including balloons and gliders, are not.

Sales and use tax is due on the sale, lease or rental of an aircraft. Tax is due on materials used to maintain, repair or remodel an aircraft, unless an exemption applies.

When buying an aircraft in Texas, you will pay between 6.25 percent and 8.25 percent sales and use tax on the aircraft’s sales price, less the value of any trade-in. In most cases, the total tax paid is based on the rate in effect at the seller’s place of business.

  • The state sales and use tax rate is 6.25 percent.
  • Local sales and use tax rates vary throughout the state, up to 2 percent.
  • The maximum combined tax rate is 8.25 percent.

If you buy an aircraft from a seller who has a Texas Sales and Use Tax Permit, the seller will collect any sales tax due and remit it to the Comptroller’s office. The seller will give you a receipt that either shows the amount of tax paid or includes a statement that tax is included in the purchase price.

If the seller does not collect the tax and an exemption does not apply, you must pay the tax to the Comptroller’s office using Form 01-156, Texas Use Tax Return (PDF).

If you buy your aircraft from an out-of-state seller for use in Texas, you can claim a credit for sales tax legally paid to the out-of-state seller against the use tax due in Texas.

Aircraft Bought and Used Outside of Texas

An aircraft bought, leased or rented outside of Texas is not subject to Texas sales and use tax if it is predominantly used outside of this state for at least one year:

  • The one-year period begins on the date the aircraft is acquired out of state or the date construction of the aircraft was completed, whichever is later.
    • The aircraft must be substantially complete in the condition for its intended use.
  • An aircraft is predominantly used outside Texas if more than 50 percent of its departures are made from locations outside Texas.
  • You must keep records showing each of the aircraft’s departures.

Leases and Rentals to Related Parties

You can lease or rent an aircraft tax free to a related party if either of the following conditions is met:

  • You paid tax on the aircraft when you bought it.
  • Your purchase was exempt from tax for a reason other than one of the following:
    • You bought the aircraft for resale.
    • Your purchase qualified as an occasional sale.

If your purchase was exempt from tax as an occasional sale, you may still lease the aircraft tax free to a related party if the related party could have claimed the occasional sale exemption on the aircraft if they were the purchaser.

A related party can be an affiliate of your company or an owner or member of either your company or an affiliate.

Exemptions

Several tax exemptions are available specifically for aircraft.

To claim an exemption, you must give the seller a Form 01-339, Texas Sales and Use Tax Exemption Certificate (PDF) when you buy the aircraft.

Certificated or Licensed Carriers

You can claim a sales tax exemption when buying, leasing or renting an aircraft if:

  • You are a certificated or licensed carrier. A “certificated or licensed carrier” is a person authorized by the FAA to operate an aircraft to transport people or property in compliance with the certification and operations specifications requirements of Title 14 of the Code of Federal Regulations, Part 121, 125, 133 or 135.

Chartering an aircraft with a pilot or crew is a nontaxable transportation service. You do not have to collect tax on your charges for chartered flights as long as the pilot and crew remain under your supervision and control during the flights.

Fractional Ownership

Tax is not due on the sale, lease or rental of an aircraft operated under the fractional ownership provisions of the FAA regulations (Title 14 of the Code of Federal Regulations, Part 91, Subpart K).

Flight Schools and Instruction

Tax is not due on the sale, lease or rental of an aircraft bought for flight instruction.

To qualify for the exemption, you must meet all of the following criteria:

  • You must have a sales tax permit.
  • You must hold a current flight school or flight instructor certificate issued by the FAA.
  • The flight instruction must be:
    • recognized by the FAA;
    • under the supervision of a flight instructor certified by the FAA;
    • designed to lead to a pilot certificate or rating by the FAA; or
    • required by the FAA.

A student cannot buy an aircraft tax free for flight instruction, but can rent an aircraft on an hourly basis tax free for exclusive use in FAA-approved flight instruction, including solo flights. The student must give the seller a Form 01-339, Texas Sales and Use Tax Exemption Certificate (PDF), that includes the flight school or flight instructor’s contact information.

Agricultural Use

Tax is not due on the sale, lease or rental of an aircraft purchased to be used at least 95 percent of the time for certain qualifying agricultural activities.

Qualifying agricultural activities include:

  • predator control;
  • wildlife or livestock captures;
  • wildlife or livestock surveys;
  • wildlife or livestock census counts;
  • animal or plant health inspection services; and
  • agricultural aircraft operations, including crop dusting, pollination or seeding.

You can travel up to 30 miles each way to perform one of the above services as part of the aircraft’s exempt use.

If you purchase an aircraft for agricultural use and use it in a taxable manner more than 5 percent of the time, you lose the sales tax exemption and must pay sales and use tax based on the purchase price of the aircraft.

“Fly-away” Exemption – Bought in Texas for Use Outside of Texas

Sales tax is not due on the sale or lease of an aircraft you use and register in another state or country before using it in Texas. An aircraft purchased under the fly-away exemption can be used in Texas within the first year, as long as it is predominantly used outside of Texas for that first year.

Activities not considered “use” include:

  • completing, repairing, remodeling, maintaining or restoring the aircraft;
  • flights necessary for troubleshooting and testing the aircraft;
  • flights between service locations under an FAA-issued ferry permit; and
  • flight training to get used to the aircraft.

The “fly-away” exemption does not apply to the short-term rental of an aircraft in Texas and flown in another state.

To claim the fly-away exemption, you must give the seller a Form 01-907, Texas Aircraft Exemption Certificate Out-of-State Registration and Use (PDF). Both you and the seller must sign the certificate. The seller must send a copy of the certificate to the Comptroller’s office within 30 days of the sale.

Foreign Governments

Tax is not due on the sale, lease or rental of an aircraft to a foreign government.

Occasional Sales

Purchase From an Occasional Seller

If you do not have a Texas Sales and Use Tax Permit and are not required to have one, you can buy an aircraft tax free from someone who is not in the business of selling, leasing or renting taxable items or services.

You must get a Form 01-917, Statement of Occasional Sale (PDF), from the aircraft seller.

Identifiable Business Segments

You can buy an aircraft that is an identifiable segment of a business tax free. Before you buy the aircraft, the income and expenses attributable to it must be separately established in the seller’s records. Both you and the seller must keep records to document the exemption.

Divergent Use

You owe tax on an aircraft you buy with a valid exemption certificate (PDF) when it is used in a taxable manner. The tax due is based on the value of the aircraft for the period of time used. You can pay the tax due on your divergent use on your Texas Sales and Use Tax Return. If you do not have a permit, you can pay the tax due to the Comptroller’s office using Form 01-156, Texas Use Tax Return (PDF).

You do not owe tax on your temporary use of an aircraft that you buy for resale.

Maintenance, Repair and Remodeling

Sales tax is due on separately stated charges for materials and parts when you have your aircraft serviced. Tax is not due on the separately stated charges for labor.

Sales tax is not due on a lump-sum charge for maintenance, repair and remodeling, but the service provider must pay sales tax when buying materials used to perform the work.

More Information

94-168
(02/2018)

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