California aircraft tax comes in two layers. You pay sales or use tax once, when you buy the aircraft or bring it into the state, starting at a 7.25% statewide rate plus any local district tax. Then every year you keep the aircraft here, the county where it’s based bills you property tax on its current market value, typically around 1% plus local overrides. The exemptions and deadlines in between are where owners either save real money or lose it.
Sales and Use Tax at Purchase
Buy an aircraft from a dealer or private party inside California and you owe sales tax. Buy one outside California and bring it in, and you owe use tax instead. The rate is identical: 7.25% statewide, plus district taxes tied to where you principally hangar the aircraft, which can push the effective rate above 10% in some areas.1California Department of Tax and Fee Administration. Tax Rate FAQ for Sales and Use Tax The California Department of Tax and Fee Administration (CDTFA) collects both.2California Department of Tax and Fee Administration. Tax Guide for Purchasers of Aircraft
Use tax exists to stop buyers from shopping for a low-tax state and then flying the aircraft home. Whether California treats your out-of-state purchase as a California transaction turns largely on where the aircraft was first functionally used and how it’s used in the months after it arrives.
The 12-Month Presumption for Out-of-State Purchases
If you buy outside California and bring the aircraft into the state within 12 months of purchase, the state presumes you bought it for use here. Under Revenue and Taxation Code Section 6248, the presumption attaches in three situations:3California Department of Tax and Fee Administration. California Revenue and Taxation Code 6248 – Presumption of Purchase for Use
- You are a California resident, which includes a closely held corporation or LLC in which California residents hold 50% or more of the ownership interests.
- The aircraft is subject to California property tax during the first 12 months of ownership.
- You are a nonresident but use or store the aircraft in California more than half the time during the first 12 months.
The presumption is rebuttable, but the burden sits on you and the CDTFA reviews these claims closely. The operative period is 12 months. Not 90 days.
Interstate and Foreign Commerce Exclusion
A separate exclusion applies when you first functionally use the aircraft outside California and then continuously use it in interstate or foreign commerce. Even if the aircraft enters California within 12 months, it will not be treated as purchased for California use so long as at least half of its flight time during the six months immediately after it enters the state is spent in interstate or foreign commerce.4California Department of Tax and Fee Administration. Exemptions and Exclusions: Vehicles, Vessels, Aircraft This is a flight-time test, not a calendar test, so detailed logs are essential.
Credit for Tax Paid to Another State
If you already paid sales or use tax on the purchase to another state, California credits that payment dollar for dollar against the California use tax due. Pay $15,000 to another state when the California use tax works out to $20,000, and you owe California the $5,000 difference.2California Department of Tax and Fee Administration. Tax Guide for Purchasers of Aircraft A lower rate elsewhere doesn’t eliminate California tax; it just reduces it.
Exemptions From Sales and Use Tax
Common Carrier Use
Revenue and Taxation Code Section 6366 exempts an aircraft sold to a buyer who uses it as a common carrier of persons or property under authority of a federal, state, or foreign government.5California Department of Tax and Fee Administration. California Revenue and Taxation Code 6366 – Aircraft Sold to Common Carriers, Foreign Governments, and Nonresidents To qualify, more than 50% of the aircraft’s operational use during the first 12 consecutive months must be as a common carrier.4California Department of Tax and Fee Administration. Exemptions and Exclusions: Vehicles, Vessels, Aircraft
Built into the statute is a revenue test. The state presumes you are not operating as a common carrier if your yearly gross receipts from common carrier operations don’t exceed 20% of the aircraft’s purchase price or $50,000, whichever is less.5California Department of Tax and Fee Administration. California Revenue and Taxation Code 6366 – Aircraft Sold to Common Carriers, Foreign Governments, and Nonresidents Compensation from the owner or related parties doesn’t count toward those receipts. You can rebut the presumption with evidence, but in practical terms a $2 million aircraft needs roughly $400,000 in annual third-party carrier revenue, or strong independent proof the aircraft genuinely operates as a carrier.
Leasing to a Carrier or Nonresident
Section 6366.1 extends a parallel exemption to aircraft sold to a buyer who leases it to a common carrier, foreign government, or nonresident who will not use the aircraft in California beyond removing it from the state.6California Department of Tax and Fee Administration. California Revenue and Taxation Code 6366.1 – Aircraft Leased to Common Carriers, Foreign Governments, and Nonresidents The same 20% gross receipts presumption applies to the lessor. This structure matters for owners who hold the aircraft in an operating entity that leases to a charter operator.
Annual Property Tax
Every aircraft based in California owes annual ad valorem property tax. The lien date is January 1, so whoever owns the aircraft on that day is on the hook for the full year. The county assessor where the aircraft is habitually situated handles valuation and billing.7California Legislative Information. California Revenue and Taxation Code 5362 – Assessment
The rate follows the standard California property tax framework: roughly 1% of assessed value plus any locally voted overrides. Unlike real estate under Proposition 13, aircraft are reassessed every year at current market value, so the bill moves with the market, the aircraft’s age, and its condition.
Which County Taxes the Aircraft
The taxing county is the one where the aircraft is habitually situated, generally meaning where it is based and where it returns between flights. If the aircraft also spends time in another state, California prorates assessed value by actual days outside the state divided by 365.8California Department of Tax and Fee Administration. Property Tax Annotations – 740.0000 SITUS An aircraft physically present in a county on January 1 that was based there in a prior assessment year keeps taxable situs in that county even if it has since moved. If there’s no permanent base in the current county on the lien date, situs defaults to the county the aircraft normally returns to between uses, or to the owner’s principal place of business.
How Value Is Determined
The county assessor must value your aircraft using standards and valuation guides prescribed by the State Board of Equalization. The assessor is specifically prohibited from relying on any informal industry custom.9Justia. California Revenue and Taxation Code 5362-5367 – Assessment Those guides look to make, model, year, installed avionics, engine hours since last major overhaul, and overall condition.
Engine time drives value more than almost anything else. An aircraft nearing its recommended overhaul interval is worth significantly less than one just overhauled, and the assessment should reflect that. Recent major overhauls and avionics upgrades push assessed value up, which is worth remembering when planning the timing of large maintenance expenditures.
Filing the Aircraft Property Statement
When the county assessor requests it, you must file Form BOE-577, the Aircraft Property Statement.10California State Board of Equalization. BOE-577 Aircraft Property Statement It asks for:
- FAA registration number, manufacturer, model, and year.
- Purchase price and date of acquisition.
- Description and cost of added avionics, modifications, or specialized equipment.
- Total hours since the last major overhaul.
- Condition, including damage history or deferred maintenance.
Counties typically mail the form in early February. It is due back by April 1.11Alameda County Assessor. Non Commercial (Private) Aircraft Missing April 1 does not immediately trigger a penalty, but filing after May 7 does: 10% of the market value of the unreported aircraft, added to the assessed value on the current roll. At that point the assessor will also estimate value rather than work from your figures, which usually produces a higher number. Filing on time with detailed, accurate information is the single most reliable way to control both the penalty risk and the valuation itself.
Appealing an Assessment
If the assessor overvalues the aircraft, you can file a formal appeal with your county’s Assessment Appeals Board. This is worth doing when comparable aircraft are selling for materially less than the assessed value, or when the assessor hasn’t accounted for high engine time, damage history, or deferred maintenance. You will need evidence: recent sale prices of comparables, broker opinions of value, or maintenance records. The deadline varies by county, so contact the assessor’s office promptly once you receive the assessment notice.
Historical Aircraft Exemption
California offers a full property tax exemption for an aircraft of historical significance. The aircraft must be an original, restored, or replica heavier-than-air powered aircraft that is either 35 years old or older, or a type of which fewer than five are known to exist worldwide.12California State Board of Equalization. Aircraft of Historical Significance Exemption – Property Tax Age alone isn’t enough. All three of the following must also be true:
- The owner is a living person, not a corporation, LLC, partnership, or trust.
- The aircraft is not used for commercial purposes or general transportation.
- The aircraft is made available for public display at least 12 days during the 12 months before January 1 of the exemption year.
File the claim with your county assessor by February 15 for the full exemption. Late claims filed by August 1 receive 80% of the reduction. The claim requires a certificate of attendance signed by the managers or sponsors of the display events.12California State Board of Equalization. Aircraft of Historical Significance Exemption – Property Tax If a warbird or vintage aircraft currently sits inside an entity, that structure disqualifies the exemption, and moving to individual ownership may be worth the analysis.
Federal Bonus Depreciation
Federal tax rules can offset part of the California purchase tax burden for business owners. The One Big Beautiful Bill Act, signed July 4, 2025, permanently restored 100% first-year bonus depreciation for qualified property, including aircraft, acquired and placed in service after January 19, 2025.13Internal Revenue Service. Interim Guidance on Additional First Year Depreciation Deduction An aircraft placed in service can be fully depreciated in the year of purchase for federal income tax purposes rather than spread across the MACRS schedule.
The benefit is tied to business use. Purely personal-use aircraft don’t qualify, and a mixed-use aircraft is depreciable only to the extent of the business-use percentage. Documentation of business use and proper reporting are essential, and the dollar amounts involved make an aviation-literate tax advisor worth the fee.