Originally published at: Washington State Imposes 10% Tax On Luxury Aircraft - AVweb
Washington State has passed a bill imposing a 10% tax on the sale and use of noncommercial aircraft valued over $500,000, effective April 1, 2026.
Here’s how some states approach aircraft taxation:
- Texas: Applies a general sales and use tax rate of 6.25% on aircraft purchases, with local taxes potentially increasing the rate up to 8.25%.
- California: Imposes a base sales tax rate of 7.25% on aircraft, with additional district taxes possibly raising the total rate depending on the location.
- Oklahoma: Levies a 3.25% aircraft excise tax on the sale price of aircraft.
- South Carolina: Charges a 5% casual excise tax on aircraft transfers between individuals, capped at $500.
- New Mexico: Applies a general sales tax rate of 5.125% on aircraft, with local taxes potentially adding up to 6.625%.
- Delaware: Notably, Delaware imposes no state or local sales taxes, making it a popular choice for aircraft registration to avoid sales tax liabilities.
In contrast, Washington’s targeted 10% tax on high-value aircraft is relatively unique and could influence aircraft owners to consider registration in more tax-friendly states.
UPDATE
HOUSE BILL REPORT ESSB 5801 (page 13)
Luxury Non-commercial Aircraft Tax.
“Beginning April 1, 2026, an additional 10 percent luxury aircraft tax applies to the value of a sale, lease, or transfer of a non-commercial aircraft exceeding $500,000. The new luxury tax applies only to the amount of the sale, lease, or transfer value exceeding $500,000 and treats the $500,000 as a deduction. The value of a trade-in aircraft may not be deducted from the vehicle price in determining the tax.”
Ohio charges sales tax on non-commercial aircraft transfers, rate based on what county the owner lives in. I paid 8% on the plane I just purchased. Price makes no difference.
America’s tacit approval of tariffs has given the green light to raise taxes on everything. It’s curious though, traditionally governments tax those activities they want less of and offer subsidies to things they want more of. So why discourage the purchase of things that would ostensibly benefit from the funds the taxes provide? The two-word answer: slush fund. The luxury tax will be found money to fund pet projects in Seattle.
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“Revenue collected from the luxury tax will be dedicated to aviation-related programs, with a significant portion allocated to a newly created sustainable aviation fuel account, aimed at supporting research, environmental review and infrastructure development for sustainable fuel initiatives.”
How many time have we heard this line of malarkey. “legalize gambling to fund education.” All these fund will go into the general treasury not a lock box for aviation. Plus why does Washington have to duplicate research long underway on alternative fuels.
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Well, of course they did, because it’s Washington AC (Above California). They’ve never met a tax they didn’t like.
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Washington has a 8% sales tax that applies to all purchases. Aircraft or vehicles bought elsewhere and registered in the state must provide either evidence of having paid a sales tax elsewhere or pay a use tax equivalent to the state’s sales tax. The 10% luxury tax is in addition to that, but it only applies to the amount over $500,000. So on that $550,000 CubCrafters Cub, the tax is $5,000. My problem with the tax is what it’s being used for.
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In my opinion, while it’s important to invest in the future of aviation, allocating a significant portion to research is not money well spent. It’s not Washington State’s role to solve this global challenge on its own. These funds would be far better spent supporting local general aviation infrastructure such as repaving runways, upgrading aging airport equipment, and improving facilities at small community airports. That’s where the tax can deliver real, tangible impact, particularly to general aviation community.
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Huh? Washington has a 8% sales tax, a little less than Texas, and NO income tax. So yes, it has met a tax it doesn’t like.
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This story needs to clarify that the amount taxed at 10% is the amount in excess of $500,000.
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No worries, those are just words. There’s never any accounting of such measures - it will become general revenue. They’ve found “rich” people and they’re now a target. Your cottage is next, your boat, eventually your “too big” truck and your home.
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Anyone nowadays would be wise to open a Delaware (or Nevada) corporation, and register the new airplane to the corporation.
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I would suspect this is IN ADDITION to the Use Tax already required to be paid during aircraft sales. So it’s double taxation.
The revenooers can get awful picky. Friend bought a T-18 homebuilt, and had to go in to get the Use Tax calculated. As often happens, the seller listed a much lower price in the Bill of Sale. The Tax Drone wasn’t believing it. She was frustrated homebuilts weren’t listed in her valuation book, so she started to go through it line-by-line…
“Is it like a Cessna 150?”
“No.”
“Is it like a Cessna 152?”
“No”
“Is it like…” and so on.
She finally had to accept the Bill of Sale value.
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“Tax Drone”. Well stated.
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Importantly, you also pay sales tax in Washington, which typically is around 10%, depending on the specific jurisdiction.
So, this is effectively 10% on the sales price + 10% on any amount over $500,000.
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It is in addition, though the taxable amount is the amount in excess of $500K.
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Becoming a popular game, I think Canada played that.
Evades the productivity gain from business aircraft. I often quote BC Hydro and BC Tel aircraft that ferried parts and people around the province in the 1970s, leave Vancouver BC early, hop around the province, pick people up on the way back so get the home that night. (For example, an accountant might need to check up on a base or help them setup and understand their record-keeping.) One was an MU-2 which is good on gravel runways, the other a Citation IIRC.
(GTE Northwest also had an aircraft doing similar tasks in the northwest US, for same reason - large distances and long trip if by road. I forget the model of aircraft, it was parked at PAE near a hanger I visited several times, that company’s KingAir was used to flight test its products.)
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Boeing used to make delivery of airliners in Vancouver BC - fly it there, exchange final payment for Boeing signature on deed, fly back to Seattle area and launch to overseas destination from there.
OTOH, when politically convenient:
B.C. Ferries has been getting an exemption from customs duty for ferries built outside of Canada, despite people wanting them built in BC to have jobs - justification is keeping fares low.
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The biannual budget in 2020 was $54B.The new signed budget is $78B. Spending is out of control and there is, effectively, no 2 party system. The legislature and governor are trying to tax their way out of a “budget shortfall”. Thankfully, residents have on multiple occasions voted down a state income tax.
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