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The continuing saga surrounding Georgia’s sales tax on jet fuel


airplane-jet-fuel

There’s a lot going on at Hartsfield-Jackson Atlanta International Airport. More than 100 million people fly in and out of the Atlanta, Georgia, airport every year on more than 950,000 flights, making it the busiest airport in the world. That requires a lot of jet fuel.

Georgia is one of few states that taxes the retail sale and use of jet fuel at both the state and local level. Or rather, it was. There’s been a lot of change to Georgia’s state and local sales taxes on jet fuel this year. Read on for more details.

Most local sales taxes on jet fuel suspended

As of July 1, 2018, the Georgia Department of Revenue is no longer collecting any of the local sales and use taxes imposed on jet fuel after December 30, 1987.

Why? The Georgia Department of Revenue explains: “This action is being taken to ensure Georgia is in compliance with federal law prohibiting the use of non-grandfathered taxes on sales of jet fuel at airports for any purpose other than airport capital or operating costs, if the airport is benefitting from federal aviation grants and other federal support.”

Under a 2014 Federal Aviation Administration (FAA) policy, local taxes on aviation fuel, except those in effect on December 30, 1987, can only be used to fund “the capital or operating costs of the airport, the local airport system, or other local facilities owned or operated by the airport owner or operator and substantially related to the air transportation of passengers or property.”

After learning that Georgia localities had been spending the revenue elsewhere — specifically, to fund schools — the FAA threatened to sanction non-compliant “airport sponsors and taxing jurisdictions.” For example, it would withhold approval of future grants, or payments on existing grants.

That compelled the State Revenue Commissioner to cease collection of local sales and use taxes enacted after December 30, 1987. However, the state is still enforcing all local sales and use taxes imposed on jet fuel before December 30, 1987, and there are many of those. As the Department of Revenue explains, “Vendors must continue to collect grandfathered local sales and use taxes retail sales of jet fuel.” To be compliant, affected businesses (i.e., jet fuel vendors) need to know which taxes were imposed when.

A local sales tax rate chart for jet fuel sales beginning July 1, 2018, is available from the Georgia Department of Revenue.

State sales tax on jet fuel suspended

Controversy has also surrounded Georgia’s state sales tax on jet fuel.

After the shooting at Florida’s Marjory Stoneman Douglas High School last February, Delta Air Lines announced it would end its policy of discounting airfare for National Rifle Association (NRA) members. In response, the Georgia General Assembly killed a proposed sales tax exemption for jet fuel that would have benefited Delta more than any other airline. Delta Air Lines is based at Hartsfield-Jackson and operates more than 70 percent of the airport’s flights.  

Governor Nathan Deal was in favor of the exemption, NRA perk or not. On July 30, 2018, he issued an executive order suspending the collection of the 4 percent state sales and use tax on jet fuel as of August 1, 2018. He noted at the time that the tax is “the 4th highest tax burden on jet fuel among states with major airport hubs,” and that “many other states impose little or no tax on jet fuel.” The tax generated approximately $39 million for the state in the last fiscal year.

The state’s loss of revenue is a gain for Delta Air Lines. Yet the executive order offered only temporary tax relief. Although the state sales tax exemption for jet fuel is currently in effect, the executive order requires ratification by the General Assembly for it to endure.

On November 9, 2018, outgoing Gov. Deal convened a Special Session of the General Assembly to ratify his executive order dated July 30, 2018, and to provide emergency funding to state agencies and local governments in the wake of Hurricane Michael. Gov. Deal urged swift action: “For those who are the beneficiaries of this legislation, timing is of the essence. They need help now.”

On Saturday, November 17, the General Assembly approved both executive orders and sent them to Gov. Deal for his signature. He signed HB 5EX and HB 1EX without delay, along with HB 4EX, which creates a tax credit for the timber industry.

Yet we haven’t heard the last of the jet fuel sales tax saga. The newly approved sales tax exemption is set to expire at the end of the fiscal year, on June 30, 2019, so it will likely be taken up by the General Assembly after it convenes in January.

Learn more about sales tax in Georgia.


Avalara Author
Gail Cole
Avalara Author Gail Cole
Gail Cole began researching and writing about sales tax for Avalara in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.