HB253 Alabama 2025 Session

Summary

Primary Sponsor

Brock ColvinRepresentative

Republican

Session

2025 Regular Session

Title

Taxation; certain aircraft and aircraft parts are exempt from sales, use, and lease taxes

Summary

HB253 would grant state and local tax exemptions for certain aircraft and parts, and adjust how aircraft leases are taxed, with hub-operation rules and a sunset in 2030.

What This Bill Does

It exempts the state sales and use tax on the sale of aircraft replacement parts and related supplies used on aircraft brought into Alabama for conversion, maintenance, or reconfiguration by certified or licensed air carriers, with certain domicile and location conditions; local governments may also exempt these purchases from local taxes if they approve. It also exempts from state sales and use tax the gross receipts from leasing certain aircraft parts, and provides a local-option framework for exemptions as well as a sunset from Sept. 1, 2025 to Aug. 31, 2030. Additionally, it changes how the state taxes leases of tangible personal property (including aircraft) by setting a 4% general rate (and 1.5% for certain vehicles), and it clarifies that for commercial aircraft the tax base is determined by the aircraft’s location when first entered into revenue service, with hub-operation criteria guiding applicability; the act also adds various exemptions to the lease tax and makes non-substantive updates to code language.

Who It Affects

• Certified or licensed air carriers and their suppliers/lessors, who would benefit from state (and potentially local) tax exemptions on the sale of aircraft parts and certain aircraft leases, subject to hub/domicile rules and local approval.
• Counties and municipalities, which can choose to exempt local sales/use/lease taxes for these aircraft transactions, and aircraft lessors/lessees whose tax liabilities may shift based on where the aircraft is first entered into revenue service and where it operates.

Key Provisions

• Exemption from state sales/use tax on the sale of aircraft replacement parts, components, systems, sundries, and supplies used on aircraft brought into Alabama for maintenance or conversion by certified/licensed air carriers; exemptions depend on aircraft domicile rules (outside Alabama basing or HQ outside Alabama). Local governments may opt in to exempt local taxes.
• Exemption from state sales/use tax on the lease of certain aircraft parts; local exemptions apply only if approved by local authorities; exemptions run from September 1, 2025 to August 31, 2030.
• Exemption from state sales/use tax on the sale of aircraft delivered in-state to carriers not hubbed in Alabama; same domicile and local-approval conditions; sunset applicable through 2030.
• Section 40-12-222 amended to set a 4% lease tax on gross proceeds from leasing/renting tangible personal property (with a 1.5% rate for certain vehicles) and to specify exemptions, including leases of aircraft to hub operations; the tax base for commercial aircraft leases is determined by the aircraft’s location when first entered into revenue service, subject to hub-operation criteria.
• Section 40-12-223 adds additional exemptions, including leasing/rental of aircraft to hub operations within Alabama and other enumerated exemptions (e.g., certain government, pollution-control, and long-term leases), with specific conditions and sunset implications.
• Effective date is June 1, 2025, with targeted exemptions available from Sept. 1, 2025 to Aug. 31, 2030.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue