Aviation Tax Exemptions Reinstated by Ohio Lawmakers

Historically, the aviation industry has enjoyed favorable treatment under Ohio’s Sales Tax law. Many transactions are either not subject to the sales tax or receive a break on the tax. For instance, all aviation repairs involving maintenance services and parts are not taxable, nor was any sale of a flight simulator.

During the recent budget process, the Ohio House of Representatives proposed removing all exemptions and caps currently contained in the Sales Tax that benefitted the aviation industry. This move galvanized many in the industry appeared before the Senate Finance Committee to argue why the exemptions are in place and how they benefit the industry. Ultimately, the Senate was convinced by the industry and the Senate version of the budget reinstated all of the current exemptions.

As often happens, when competing versions of a bill are passed by the Ohio House of Representatives and Senate, a Conference Committee was appointed by each chamber to meet and negotiate the differences between the two bills. The Conference Committee works through each point of difference to create a conference report that is the final version of the legislation. The conference report is then placed in front of each chamber for a yes or no vote with no further opportunities for amendment. In the end, the Conference Committee adopted the Senate version of the budget bill. Additionally, both chambers voted in favor of the bill and the Governor signed it this morning without exercising his veto on these exemptions. This means that the current exemptions and caps contained in the Sales Tax law will remain good law.

The bottom line is, despite the legislative challenge, if you are in the aviation industry or if you do business with aviation concerns, the current sales tax law that exempts maintenance and repair and the sale of flight simulators and which places a $800 cap on the tax applicable to the sale of fractional ownership interests remain in place.
If you have any questions about how Ohio’s Sales Tax Law impacts your own transactions, please feel free to contact either Jerry Eichenberger or Maryellen Corbett for further explanation.