News and Insights

Colorado Expands Exemption for Aircraft Purchased for Out-of-State Use

Tax Development Apr 06, 2016

Colorado Expands Exemption for Aircraft Purchased for Out-of-State Use to Allow Time for In-State Refurbishment

House Bill 16-1119 (“Bill”) will expand the sales tax exemption for aircraft purchased for use outside of Colorado. The Bill allows out-of-state residents and on-demand carriers to claim an exemption if the plane will be removed from Colorado within 30 days after any maintenance, refurbishment, or engine work or within 120 days after the sale, whichever is longer.

Currently, the exemption requires that the aircraft be removed from the state within 120 days after the purchase. The 120-day deadline may discourage buyers from using Colorado companies that provide aircraft maintenance, interior work, and engine repairs. For example, if a buyer uses a Colorado company for repair or refurbishment and the work and necessary testing or training takes more than 120 days, the sales tax exemption is lost.

In 2013, the Colorado Legislature passed a bill to provide tax incentives for the aircraft repair and maintenance industry. Companies located in Aviation Development Zones (ADZ) and involved in maintenance and repair, completion, or modification of aircraft are eligible for state income tax credits of $1,200 for each new full-time job. ADZ airports include Boulder, Centennial, Colorado Springs, Denver International, Erie, Fort Collins/Loveland, Front Range, Grand Junction, Greeley/Weld, Pueblo Memorial, Rocky Mountain, Stevens Field, and Nucla Hopkins Field.

This expanded exemption will apply to aircraft sold after June 30, 2016.


Jeremiah T. Lynch