Indiana enacts tax credits for aircraft sales and property tax deductions

Indiana's Senate Bill 1, introduced on April 15, 2025, is set to reshape the landscape of aircraft taxation and individual income tax reporting in the state. The bill introduces significant changes aimed at providing tax credits for aircraft owners and enhancing transparency in income tax filings.

At the heart of Senate Bill 1 is a provision that allows aircraft owners to receive a tax credit when they sell an aircraft on which they have already paid excise tax. This credit is calculated based on the excise tax paid, offering up to 90% of the tax for the remaining months of the registration year after the sale. However, the credit can only be applied to reduce taxes on another aircraft purchased within the same registration year, and no refunds will be issued for unused credits. This move is designed to incentivize aircraft ownership and stimulate the aviation sector in Indiana.

Additionally, the bill mandates that taxpayers must now identify their principal place of residence on their adjusted gross income tax returns starting in 2025. This change aims to improve the accuracy of tax assessments and ensure compliance with state tax laws.

The bill has sparked debates among lawmakers, particularly regarding its implications for local revenue and the potential burden on county auditors tasked with verifying tax credits. Critics argue that while the bill may benefit aircraft owners, it could lead to complications in tax administration and a decrease in local funding if not managed properly.

Supporters, however, contend that the tax credits will encourage investment in aviation and could lead to job creation in related industries. The economic implications of this bill could be significant, as it aims to bolster Indiana's position as a hub for aviation and aerospace activities.

As Senate Bill 1 moves through the legislative process, its potential to reshape tax policy in Indiana remains a focal point of discussion. Lawmakers will need to weigh the benefits of stimulating the aviation sector against the administrative challenges and fiscal impacts on local governments. The outcome of this bill could set a precedent for future tax legislation in the state.