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Committee approves technical amendment and favorably reports aircraft sales/lease tax exemption bill
Summary
House Bill 253 would exempt sales, use and lease taxes on certain aircraft and aircraft parts to retain maintenance, repair and overhaul business in the state; the committee approved a technical amendment and gave the bill a favorable report.
House Bill 253, sponsored by Representative Coleman, would exempt gross receipts from the sale of certain aircraft and aircraft parts from state sales and use tax and from the state rental and lease tax. The sponsor said the change is intended to keep maintenance, repair and overhaul (MRO) work in Alabama rather than losing contracts to neighboring states that do not tax the transactions.
Representative Coleman told the committee that other states do not tax the change‑of‑ownership transactions that can occur when a lessor transfers a plane and an MRO performs refurbishment: "What led to this bill is our local Alabama based maintenance repair overhaul companies at our airports... We are one of the few states that still tax this transaction...So we are missing out on a lot of opportunities, job creating opportunities," Coleman said.
The sponsor described a technical amendment that corrects a code cross‑reference so the local opt‑in/opt‑out language applies to the rental and lease tax section as intended. The committee approved that technical amendment, seconded by Representative McKeel, by voice vote.
Committee members discussed whether to include general aviation aircraft; the sponsor said that issue was left out to limit fiscal exposure and that it could be addressed separately. After discussion the committee voted to give the bill a favorable report; Representative Kiel moved the motion and Representative Baker seconded it. Committee members cited local MROs— loss of work to neighboring states and noted the potential for higher‑paying jobs in maintenance and overhaul if the exemption keeps business in Alabama.
Sponsor testimony included anecdotal estimates of lost work ("10 to 15 a year" for some MROs) and potential demand (one carrier reported about 538 planes needing refurbishment over six years). The bill includes a five‑year sunset on the local opt provision, according to the sponsor's description, and a technical amendment fixed a cross‑reference in the rental/lease tax section.
