Aircraft Sales Tax

Any civil aircraft in Utah must have a current certificate of registration to operate in the state. Aircraft subject to registration are considered vehicles and are subject to sales and use tax. If the seller of the aircraft is a licensed Utah vehicle dealer, the seller is responsible for collecting the tax at purchase. Otherwise, the purchaser is responsible for paying sales and use tax directly to the Utah State Tax Commission using form TC-828, Aircraft Sales and Use Tax Remittance Form. Aircraft located in Utah are required to be registered through the Utah Department of Transportation, Division of Aeronautics. Additional information is available at udot.utah.gov/aeronautics.

Frequently Asked Questions

What is sales and use tax?

Sales and use tax is a transaction tax that applies to most purchases of tangible personal property. When a seller does not charge Utah sales tax, the purchaser is responsible for paying the (use) tax. For aircraft purchases where the seller did not collect sales tax, use Tax Commission form TC-828, Aircraft Sales and Use Tax Remittance Form.

How do Utah tax laws, rules, and regulations require sales or use tax to be paid on aircraft?

Under Utah law, all vehicles (including aircraft) subject to titling or registration must show that sales tax was paid to the state. Any civil aircraft located in Utah must also have a current certificate of registration to operate in Utah. If the seller of the aircraft is a Utah licensed vehicle dealer, the seller is to collect the tax at purchase. Otherwise, the purchaser is responsible for paying sales and use tax directly to the Utah State Tax Commission using form TC-828, Aircraft Sales and Use Tax Remittance Form.

Aircraft are registered through the Utah Department of Transportation, Division of Aeronautics. Additional information is available at udot.utah.gov/aeronautics.

What sales tax rate do I use?

Sales and use tax is calculated by multiplying the purchase price by the jurisdiction tax rate. The jurisdiction’s tax rate is based on the aircraft’s registration address filed with the FAA. A credit is allowed against the purchase price for the value of other aircraft or vehicles’ trade-ins. See Publication 5 for detailed information about the trade-in exemption.

Without a bill of sale or written evidence of purchase price, the Utah State Tax Commission uses an average retail price to estimate the taxable amount of aircraft until we have proof of the actual purchase price. Tax rates are listed by location at Utah Sales & Use Tax Rates, or you can contact the Tax Commission at 801-297-2200 or 1-800-662-4335. Tax rates may change quarterly.

My aircraft is not registered in Utah. Do I owe Utah sales and use tax?

For individuals only, if the aircraft is based and operated in Utah, regardless of domicile, the aircraft is operated in the state for more than six months, or the cumulative majority of a year, it must be registered in Utah to operate in the state. Utah sales and use tax is due at the time of the purchase or completion of FAA registration. See above, What sales rate do I use? above for more information.

For any partnership, Limited Liability Company, firm, corporation, association, or other entity that maintains a main office, branch office or warehouse facility in this state and that bases and operates an airplane in this state must be registered in Utah to operate in the state. Utah sales and use tax is due at the time of the purchase or completion of FAA registration. See above, What sales rate do I use? for more information.

If the aircraft is used or stored in Utah, sales and use tax applies to the purchase. If the aircraft is not used or stored in Utah, you can show that tax is not due by providing documentation that sales tax was paid to another state (if applicable) and provide flight logs, a hanger rental agreement, or other documentation of the aircraft’s location.

If the aircraft is no longer airworthy, do I still have to pay sales tax?

Yes. Sales and use tax is a transaction, tax based on the aircraft’s price when purchased, unlike a property tax, which is based on the property’s current value. The tax is due based on the purchase price of the aircraft, regardless of whether it is later damaged or lost value.

What if I already sold the aircraft in question?

Because sales and use tax is a tax on the purchase transaction, tax is due on the transaction that occurred when you purchased the aircraft, regardless of whether you still own it.

If an airplane was purchased from a private individual, is it exempt from sales and use tax?

No. Although an exemption exists for “isolated or occasional sales,” that exemption does not apply to sales of vehicles that require registration, including aircraft. A licensed Utah dealer should collect the sales tax for an aircraft purchase. If tax is not collected when the aircraft is purchased, then the sales and use tax is due from the purchaser at the time of the aircraft’s registration.

How do I pay the tax at registration?

Aircraft must be registered annually with the Utah Department of Transportation, Division of Aeronautics. You should register your aircraft as soon as the registration with the FAA is complete. After registering your aircraft, use Tax Commission form TC-828, Aircraft Sales and Use Tax Remittance Form, to pay your sales and use tax.

How do I calculate sales tax?

Calculate the sales tax by completing the bottom section of form TC-828, Aircraft Sales and Use Tax Remittance Form. Your sales tax rate is based on the street address used with the FAA aircraft registration.

To find the correct tax rate, refer to the above section, What sales tax rate do I use? 

Verify the purchase price by providing a copy of the sales contract. If you have already paid the sales tax to a licensed aircraft dealer, provide a copy of your contract showing that sales tax has been collected. Write “Tax already paid” in the “Tax due” section of form TC-828.

What if I bought the aircraft for resell or lease?

To purchase a tax-exempt aircraft for resale, you must be engaged in manufacturing, distributing, or selling aircraft and be licensed with Utah to collect sales tax.

If the aircraft is purchased with the intent to lease, the purchase is exempt under the resale exemption if the aircraft is leased. Aircraft lease payments involving related entities must represent the fair market value of the lease. Otherwise, sales tax is due on the original purchase of the aircraft.

Although your aircraft purchase is exempt from sales tax, you must collect tax on the lease payments if the lessee stores or uses the aircraft in Utah unless the lessee provides an exemption certificate (for example, as an authorized carrier). If the aircraft was purchased first to be used and is only later leased, the exemption does not apply, and tax is still due on the lease payments.

Flight School aircraft leases and rentals.

If the flight school rents aircrafts to student-pilots and requires the instructor to be in the plane with the student or supervise the student on the ground, the aircraft rental is not subject to sales tax. Sales tax is due on the purchase or lease of the aircraft by the flight school.

Any aircraft rented to pilots without an instructor, are subject to sales tax on the rental price. Use tax must be paid for use of the aircraft by the flight school.

See What if I bought the aircraft for resell or lease?  on how to buy an aircraft for resale or lease. Also see Pub 25 for an explanation of rentals with and without an operator.

I purchased/manufactured a kit plane manufactured in Utah.

Utah allows a sales tax exemption for aircraft originally manufactured in Utah. Proof of manufacturing in Utah is required for the exemption. If you are claiming this exemption, complete TC-828, and in the “Tax due” section, write exempt and include the proof of manufacturing in Utah with the form.