Assigned to FICO AS PASSED BY COMMITTEE
ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
AMENDED
FACT SHEET FOR S.B. 1636
excise tax; jet fuel; definition
Purpose
Expands the definition of jet fuel, for the purpose of the jet fuel excise and use tax, to
include an aviation turbine fuel that consists of conventional and synthetic blending components
that can be used without the need to modify aircraft engines and existing fuel distribution
infrastructure, and jet fuels derived from coprocessed feedstocks at a conventional petroleum
refinery.
Background
Excise taxes are imposed on specific goods, services and activities identified in statute. Use
taxes are imposed on individuals who purchase a taxable product from an out-of-state location,
pay no sales tax, and use, consume or store the product in Arizona (ADOR).
Jet fuel is crude oil, any fraction of crude oil or any petroleum-based substance comprised
of a complex blend of hydrocarbons derived from crude oil that is expressly manufactured and
blended for the purpose of effectively and efficiently operating jet or turbine powered aircraft
(A.R.S. § 42-5351).
The jet fuel excise tax is levied on the retail sale of jet fuel and the jet fuel use tax is levied
on the storage, use or consumption in the state of purchased jet fuel. The first 10,000,000 gallons
of jet fuel purchased, stored, used or consumed in Arizona are taxed at a rate of 3.05 cents per
gallon. Any amount over 10,000,000 gallons is not subject to tax. Statute identifies specific
exemptions from the jet fuel excise and use tax, including: 1) sales for resale in the regular course
of business; 2) sales subject to equivalent or higher taxes in other states; and 3) sales to commercial
airlines for outbound international flights originating in Arizona. If excise taxes are paid to another
state in an amount less than that imposed by Arizona, statute allows for a deduction against the
Arizona tax in an amount equal to the tax levied by the other state. Monies collected from the jet
fuel excise and use tax are deposited in the State Aviation Fund (A.R.S. §§ 42-5351; 42-5352 and
42-5354; ADOR).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Expands the definition of jet fuel to include:
a) an aviation turbine fuel that consists of conventional and synthetic blending components
that can be used without the need to modify aircraft engines and existing fuel distribution
infrastructure; and
b) jet fuels derived from coprocessed feedstocks at a conventional petroleum refinery. FACT SHEET – Amended
S.B. 1636
Page 2
2. Applies the modified definition to taxable periods beginning on or after the first day of the
month following the general effective date.
3. Becomes effective on the general effective date.
Amendments Adopted by Committee
• Modifies the definition of jet fuel to include aviation turbine fuel that consists of conventional
and synthetic blending components that can be used without the need to modify aircraft engines
and existing fuel distribution infrastructure.
Senate Action
FICO 2/12/24 DPA 6-0-1
Prepared by Senate Research
February 13, 2024
MG/JC/sdr