04/15/2025
HB1807 passed the Senate and is on its way to the Governor’s desk!! Thank you to all who helped get this done! A major victory for ARGAA and the Arkansas general aviation community!
Why is this important to Arkansas general aviation? Longstanding Arkansas tax law allows those purchasing aircraft to be leased to a third party the “either-or” option of either (1) paying sales tax upon the initial purchase of aircraft, or (2) paying use tax on the lease income of the aircraft as it is received. Arkansas’ tax authority, the Department of Finance and Administration (DF&A) - reinterpreting the law not as “either-or” but “both” - had begun targeted audits of aircraft owners and levying taxes they were not authorized to collect, resulting in double-taxation of aircraft.
HB1807 clarifies who qualifies for the “either-or” option and what requirements must be met. It codifies long-standing aviation tax law and resolves ambiguities that have become an impediment to having more aircraft based in the state.
This bill does three things:
· Clarifies how sales tax is applied to aircraft in held in inventory for resale.
· Codifies the generally accepted minimum lease rate of 7.5% of the acquisition cost, the industry standard used in multiple states, when calculating use tax.
· Prevents DF&A from implementing double-taxation of aircraft held for resale or lease, an issue that has prevented more aircraft from being based in Arkansas.
HB1807 was supported by the Arkansas General Aviation Association, the Arkansas Aerospace and Defense Alliance, Arkansas Airport Operators Association, Arkansas State Chamber of Commerce, Aircraft Owners and Pilots Association (AOPA), National Business Aviation Association (NBAA) and the Experimental Aircraft Association (EAA).
