How Aircraft Taxes Fund School Districts

The US public school system depends largely on revenue from property taxes, both “real” property and personal property. Most local governments tax personal property, which in many states, include private aircraft. 

For communities with private airports, ensuring compliance across all aircraft ensures schools get the funds they need.

The Role of Millage Rates 

Local property taxes are typically the largest source of local funding for public schools. They provide a stable and consistent revenue stream that help fund everything from day-to-day school operations including teacher salaries, utilities, and instructional materials to bond repayment.

The process of setting millage rates is a difficult balancing act for elected officials. Cities set rates through a process involving local government bodies and public participation. After estimating the city’s total expenditures, they subtract anticipated revenues from other sources (e.g., state funding, fees). 

Personal property values also help create the annual tax digest and tax base for each jurisdiction. Whatever deficit exists, property taxes are responsible for bridging the gap.

We can see how just one aircraft, valued at a million dollars, that actively avoids its tax responsibility can affect the entire budgeting process. It increases taxes on the jurisdiction's other payees, namely homeowners. That’s an unfair shift. Often, there are laws to prevent a drastic millage rate increase. In Florida, for example, any significant increase in millage rates requires higher approval thresholds and public notifications. That one aircraft may prevent much-needed improvements to the community — namely the schools.

There's no standard percentage across the U.S. for how much of aircraft tax revenue goes to schools. Each locale would be different. What is known for sure is that without full compliance, schools lose out.

Aircraft Taxation as Property Taxes

States likewise give money to local education systems. In many states, private aircraft are included in property taxes as a form of personal property. Taxes owed are based on the aircraft’s fair market value. The actual site where the aircraft is based, rather than the owner's residence, generally determines where it’s taxed. After all, aircraft benefit from the protection of the state or local jurisdiction where it’s kept. For tax purposes, we measure the situs, nexus, and domicile of an aircraft to determine its home base.

The following states have personal property taxes that may apply to aircraft: Alabama, Arkansas, California, Georgia, Kansas, Kentucky, Louisiana, Minnesota, Missouri, Nebraska, Nevada, North Carolina,  South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wyoming.

Property money often contributes to local general funds, which can include the public school system. In some areas, personal property taxes on aircraft might contribute to school funding in the same proportion as real property taxes. In other jurisdictions, aviation-specific taxes might be entirely dedicated to aviation-related expenses. Some states also have aircraft registration fees in place of property taxes, and others levy both. The percentage can vary widely by location.

Aircraft Taxation for Schools in Texas

Taking a deeper look at Texas, the allocation of those aircraft tax revenues to schools is complex. Aircraft are generally subject to property taxes, which are a significant source of funding for schools. There isn't a specific percentage of aircraft property taxes that is mandated to go to schools. Instead, aircraft are typically taxed as part of the overall property tax base.

The impact of aircraft taxes on school funding can vary significantly depending on the local tax base. Areas with more valuable aircraft or a higher concentration of aircraft ownership may see a larger contribution to their school funding from this source.

Aircraft are typically subject to property taxes based on the assessed value of the aircraft. A large portion of property tax revenue in Texas goes to fund local school districts, the exact percentage varying by district.

Texas uses a system known as the "Robin Hood" plan (officially called "recapture") where property-wealthy districts share some of their local tax revenue with property-poor districts. This can affect how much of the local aircraft tax revenue stays within a particular school district.

Property taxes are a significant factor in funding Texas public schools. While this is just one state, they’re not alone. It’s no secret that American schools often face funding issues. Increasing aircraft compliance helps.

Ensuring Compliance Is a Priority

Tax offices are tasked with managing these property types and ensuring that every single asset is valued correctly each year. What a job! 

(We can help.)

10 Tricky Ways Aircraft Avoid Tax Liability

We know all too well how much tax departments have on their plate. From staffing shortages and increased workloads to rapidly rising appeal rates, aircraft are only a blip on the radar. (Get it?) The sheer number of aircraft makes it difficult — the ways in which aircraft try to avoid detection efforts makes it near impossible.

We hear it from our clients every day:

"Unable to verify flights — they are blocked from public tracking!"

"Not reported on hangar lists. No information for billing”."

"Registration still pending."

We get it.

We’re pilots ourselves, which is how we know the ways aircraft get away with it. In this article, we’re sharing that information with you. Here are 10 tricky ways aircraft owners can make your jobs harder.

  1. Register out of state

    Not every state taxes aircraft, so  owners often choose to register in those states. When an aircraft is actually flying to and from districts who do tax aircraft, however, they’re responsible for paying those taxes. Click here for a specific, real-life example.

  2. Purchase a registration sticker out of state to claim they meet that state’s tax obligation

    This is a variation of registering out of state to avoid taxes. In this case, they’re paying the small, one-time registration fee hoping it will mitigate their true tax responsibility. Unfortunately for them, when an aircraft flies to and from multiple locations, they’re responsible for any tax liability that may be incurred in accordance with that community’s taxation rules.

  3. Blocked tail numbers

    By blocking  the aircraft’s public flight tracking data, an aircraft becomes untrackable in systems like FlightAware. Intended as an FAA security measure, aircraft can misuse it for tax evasion.

  4. Fly under a different call sign

    In addition to blocking the tail numbers, aircraft can change their call sign. This makes it nearly impossible for tax departments to see that a flight occurred. (Not for us, though.) 


    An aircraft can fly to one city, change their call sign and operate under a different identifier. This makes assigning the flights to the correct aircraft a huge challenge. The most difficult part of this process is identifying that a call sign was used in the first place. A task that’s best left to the professionals.

  5. Claim personal use only

    Some states don’t tax personal-use aircraft, so naturally some owners claim their aircraft is only used for personal use. This is where advanced technology, manual research and analysis become crucial. We can see, for instance, exactly where an aircraft flies and match that against commercial locations. Click here for a recent example from Texas.

  6. Personal registration hiding a 135 operator

    A slight variation of the personal use claim, this happens when someone registers their aircraft to an individual in a state that does not tax personal use. In this instance, however, the individual might lease their aircraft to a commercial charter company to recoup some operating expenses. The county sees the aircraft as registered to an individual. It’s only when we dig deeper do we find out the truth. Click here for that Texas example again.

  7. Deceptive hangar receipts

    We see a lot of confusion when it comes to how hangar payments determine situs of a plane. In short, they don’t. 


    Ultimately, aircraft owners are using hangar receipts to mask their true location. We’ve found examples of aircraft that pay a monthly hangar lease in a state like Delaware, yet the aircraft hasn’t been to that hangar in years. 


    When an aircraft has blocked their tail number and presents an out-of-state hangar receipt, it’s nearly impossible for assessors to know the truth. 

  8. Incomplete hangar lists

    In addition to deceptive hangar receipts, incomplete hangar lists present a problem. We’ve heard clients say things like: 

    “Not on hangar lists, requested more information. Not enough information to assess."

    "This aircraft isn't on my hangar list. They are not based here."

    "Not reported on hangar lists; I tried Googling it and couldn't find anything."

    Hangar lists are notoriously inaccurate, so unless someone is looking at each individual aircraft, they’ll get missed. 

  9. Paperwork, paperwork, paperwork

    Often, aircraft owners will present landing fees, fuel receipts and registration fees as proof of residency or situs. There’s too much paperwork for assessors to sift through on top of their other responsibilities.

    An owner recently purchased a second out-of-state home in Florida, while the aircraft remained at the business location in our client's jurisdiction. The owner thought that a few fuel receipts from Florida, some landing fees and a new address would change the fact that the aircraft was operating 315 days a year in our client's jurisdiction.  


    It didn’t. Situs remained unchanged on that particular aircraft.

  10. FAA delays

    Depending on the time of year and influx of registrations, the FAA can get behind. WAY behind. When a tax assessor looks at an FAA report, they’ll see a certification that may be months old. We see this a lot in the last quarter of the year. When an aircraft is worth tens of millions of dollars, a few weeks delay in recording and reporting could cost communities dearly. Click here to read about the perfect storm: end-of-year aircraft taxation.

Clearly, there are many ways aircraft get around paying their fair share of taxes.

Before hiring Specialized Tax Recovery, many of our clients were literally Googling for answers. A fruitless and frustrating experience. They have better ways to spend their time, and so do you. 

Contact us today.

The Perfect Storm: End-of-Year Aircraft Taxation

The end of the year is always tough for assessors when it comes to ensuring aircraft compliance. Sales transactions traditionally spike in Q4 for tax reasons. Sellers want to record their sale by year-end, and buyers want their purchase on the books come the first of the year. Throw in the phasing out of aircraft bonus depreciation, and you have the perfect storm. With so many aircraft changing hands, tax departments can’t possibly account for every instance of tax liability. 

(But we can.)

What Is Aircraft Bonus Depreciation?

The 2017 Tax Cuts and Jobs Act allowed aircraft owners to immediately deduct 100% of their aircraft’s depreciation, provided the aircraft met the requirements. 

Rather than wait each year for incremental depreciation, owners claimed it all upfront for aircraft bought and used between September 27, 2017, and January 1, 2027. That bonus depreciation started to phase out in 2022 and continues to reduce in rates through 2027. Depending on the aircraft, starting January 1, 2024, owners will only be able to leverage bonus depreciation at reduced 60–80% rates.

FAA Delays in Certification Causing Tax Revenue Losses

In addition to increased sales, we’re seeing delays in aircraft certification from the Federal Aviation Agency (FAA). With multiple aircraft changing owners in a short period of time, the FAA is simply overwhelmed. For example, even though an aircraft was bought and sold in December of 2023, the FAA may not record it until months later in May, June, or even August of 2024.

That’s a problem for compliance.

Most counties look for notification from the FAA as their trigger to issue a tax bill. Because those jurisdictions dictate tax liability on the lien date, or when the owner purchased the plane, the delayed FAA notification causes delayed noticing.

If someone purchases a $30 million plane, the tax revenue would be a significant loss.

To avoid this loss, someone needs to match the Bill of Sale with the application date, which will ensure years of liability are not lost to a simple recording delay. Confirming each date ensures the highest level of accuracy and compliance for all aircraft for each year. But it’s hard to do.

Tracking Aircraft Is Challenging

Current best practices are in need of new technologies and expert insight to increase their effectiveness. With nationwide staffing shortages and shrinking budgets, most offices struggle to find the time to focus on some of their most valuable (and challenging) taxable personal property.

We do.

We look at each individual aircraft. 

Through proprietary technology, expert analysis and experience, we alert our clients when a new aircraft establishes a home base in their jurisdiction. This allows that location to ensure compliance at a whole new level of accuracy. The exact goal of every tax office in the USA. Tax the taxable items at the correct value. Nothing more. Nothing less. 

Sound interesting to you? Let’s talk more. 
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