Assigned to FIN & APPROP FOR COMMITTEE
ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
REVISED
FACT SHEET FOR S.B. 1085
TPT; use tax; exemption; aviation
Purpose
Expands aviation related transaction privilege tax (TPT) deductions and use tax exemptions
to include property used for maintaining, repairing or overhauling general aviation aircraft and
property used for aircraft repair, remodeling or maintenance, rather than only property used for
such purposes by persons who are certified or licensed carriers of persons and property.
Background
TPT is a gross receipts tax levied for the privilege of conducting business in Arizona and
is imposed under 16 business classifications. Statute requires businesses to file a TPT return
monthly and pay TPT to ADOR by the 20th day of the following month after the tax is incurred
(A.R.S. §§ 42-5008 and 42-5014). Use tax is a tax imposed on individuals who purchase taxable
products from out-of-state locations or online retailers and as a result, do not pay TPT (ADOR).
The gross proceeds of sales or gross income derived from sales of certain tangible personal
property must be deducted from the tax base for the retail classification of TPT, including:
1) aircraft, navigational and communication instruments and other accessories sold to persons
holding supplemental air carrier certificates under federal aviation regulations; and 2) machinery,
tools, equipment and related supplies used or consumed directly in repairing, remodeling or
maintaining aircraft, aircraft engines or aircraft component parts by or on behalf of a certified or
licensed carrier of persons or property. The outlined aviation-related tangible personal property is
also exempt from use tax (A.R.S. §§ 42-5061 and 42-5159).
The Joint Legislative Budget Committee (JLBC) anticipates that S.B. 1085, beginning in
FY 2026, would result in a state General Fund revenue reduction likely in the millions. Due to data
constraints, JLBC cannot determine the magnitude of the impact (JLBC fiscal note).
Provisions
1. Expands the aviation related TPT deduction and use tax exemption to include aircraft,
navigational and communication instruments and other accessories sold to persons that will
use the property for maintaining, repairing, or overhauling general aviation aircraft.
2. Expands the aviation related TPT deduction and use tax exemption to include all machinery,
tools, equipment and related supplies used or consumed directly to repair, remodel or maintain
aircraft, aircraft engines or aircraft component, rather than only machinery, tools, equipment
and related supplies used by persons certified or licensed to carry persons or property.
3. Applies the modified exemption and deduction to taxable periods beginning on or after the
first day of the month following the general effective date. FACT SHEET – Revised
S.B. 1085
Page 2
4. Becomes effective on the general effective date.
Revisions
• Updates the fiscal impact statement.
Prepared by Senate Research
February 20, 2025
MG/AL/ci