The method of valuation and the amount vary greatly from state to state. Some states use the aircraft registration fee merely to track new aircraft registered in their state and the fee is relatively low. Personal Property Taxes Personal property taxes are usually assessed at the local level, usually in the county where the aircraft is hangared, and are always an annual tax. Unlike the aircraft registration fees, these personal property taxes are usually very significant in their amount and the impact they can have on an aircraft operation. However, Colorado, Delaware, Florida, Maryland, New Jersey, New York, Pennsylvania and Vermont do not impose either.
Aircraft are usually subject to the tax laws of the state in which the aircraft is domiciled.
However, even though one may have avoided the state sales tax, it is now the use tax of the state where the aircraft is going to be hangared that is of concern. Several states have exemptions from the use tax centering on whether or not the aircraft is used in commercial transportation. You should always remember that an exemption is going to be very narrow and you need to understand all of the idiosyncrasies. All this sounds and is very confusing, and, therefore, it is necessary to not only understand all of the taxes affecting aircraft ownership and operations in your state, but also the taxes in other states so that you do not find yourself paying a tax that is not necessary. The subsequent articles on state taxes will be aimed at trying to explain how to accomplish good state tax planning.