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Alabama Sales Tax Exemptions for Aircraft Parts

The Alabama Senate approved a version of HB 39, a bill that would make parts and components used to build military or transport aircraft sales tax exempt (to view the bill, search with the keyword "aircraft"). The bill is designed to promote growth in the aviation industry. 

"What we're trying to do is help recruit more aviation industries in our state," explains Senator Clay Scofield, R-Red Hill. Since more aviation industries would mean more aviation jobs, Senator Ben Brooks, R-Mobile, calls this a "pro-jobs bill."

According to Al.com the Legislative Fiscal Office has estimated that the bill would cut sales tax collections by the Education Trust Fund to $3.5 million per year, a $2.4 million decrease.

The Senate passed the bill 28-0, and it now awaits approval by the house before it goes to the Governor. The bill states:

The gross receipts from the sales of parts, components, and systems that become a part of a certified transport category aircraft certified military, federal, state, local, and commercial certified transport category aircraft or rotary wing aircraft which undergoes conversion, reconfiguration, or general maintenance; provided, however, that this exemption shall not apply to a local sales tax unless a local sales tax exemption is provided by local law or approved by resolution of the local governing body either prior to or after the effective date of the act adding this subdivision.

The exemption only applies to the state-level application of sales tax. Local jurisdictions can choose to extend the exemption from the local tax as well for qualified businesses. The sales-tax exemption would expire in May 2020 unless extended by the Legislature.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Will Frei
Avalara Author Will Frei
Will Frei covers sales tax news including best practices, legislation and sales tax technology. He is the Social Media Manager at Avalara.