Indiana legislature passes aviation sales tax exemption bill

March 17, 2014

A bill that expands the 7 percent sales tax exemption on parts used for aircraft maintenance passed the Indiana legislature March 13. A bill that expands the 7 percent sales tax exemption on parts used for aircraft maintenance passed the Indiana legislature March 13. The bill, which builds upon aviation tax reforms achieved in the state in 2013, was championed by Senate Majority Floor Leader Brandt Hershman, a pilot and AOPA member.

After looking at the general aviation reforms achieved during Indiana’s 2013 legislative session, Hershman sought ways to further strengthen the Indiana aircraft maintenance industry, and an opportunity was found with the aircraft maintenance sales tax exemption enacted just last year.

Last year’s exemption allowed Indiana’s Part 145 certificated repair stations to provide sales tax exempt maintenance services, and companies immediately began to see additional business and more jobs. The state was able to retain and attract new aircraft maintenance business previously lost to Michigan, Ohio, and other states with similar exemptions. Looking to continue Indiana’s progress, Hershman and AOPA worked to find ways to expand the exemption’s applicability to a wider group of aviation businesses.

Senate Bill 367 contains the provision to expand the sales tax exemption for aircraft maintenance. Any maintenance provided by any FAA-certified mechanic—not just a Part 145 repair station—that leases space on a public-use airport would be able to perform tax-exempt work.

With this bill, more of Indiana’s aircraft repair jobs would be able to be performed without the additional burden of a 7 percent sales tax. It would also reduce the cost of flying and spur additional aviation activity and aircraft maintenance job creation. The bill now goes to Gov. Mike Pence for his signature.