Virginia Sales Tax Exemptions for Aircraft in Effect

Update on Extended Exemption for Certain Aircraft Retail Sales and Use Tax

Legislation was passed by the General Assembly and approved by the Governor that extends the effective date for the exemption from the Virginia retail sales and use tax for certain aircraft parts and supplies. Specifically, the legislation extends from July 1, 2022 through June 30, 2025, the exemption for parts, engines, and supplies used in maintaining, repairing or reconditioning aircraft or an aircraft’s avionics system, engine or component parts. The extended exemption continues to apply to unmanned systems but for unmanned systems (such as drones) it is applicable only to those with a maximum takeoff weight of at least 2,400 pounds.

Overview of Sales Tax Exemptions for Aircrafts

In July 2018, Virginia passed an exemption from Virginia’s Retail Sales and Use Tax for parts, engines, and supplies used for maintaining, repairing, or reconditioning aircraft or any aircraft’s avionics system, engine, or component parts. The exemption is for both manned and unmanned (e.g., drone) systems. The exemption, however, does not extend to tools or equipment used in the maintenance or repair process. The exemption is essentially for unscheduled common carriers and owners of private aircraft and systems.

Since 1966, there has been an exemption from Virginia’s Retail Sales and Use Tax for purchases by scheduled airlines. That exemption is for tangible personal property sold or leased to airlines operating in intrastate, interstate or foreign commerce as a common carrier providing scheduled air service on a continuing basis to one or more Virginia airports at least one day per week, for use or consumption by such airline directly in the rendition of its common carrier service. The existing exemption for scheduled airlines is for items used or consumed directly in the rendition of common carrier services and is broader than the new exemption.

Questions on the changes facing Virginia retail sales and use taxes? We can help. Contact a member of the State and Local Tax team or Email | 804.747.0000

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