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HB 1807

Bonds; authorize issuance to assist City of Oxford with extending Pegues Road.

2025 Regular Session Introduced by Clay Deweese and 2 co-sponsors

Expands/clarifies the sales tax exemption for aircraft inventory used in rental/charter, including a 7.5% revenue test, related-party leases allowed, and up to 2-year use before ta

Died In Committee
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Bill Summary · HB 1807

Summary — HB 1807 (Arkansas, 95th General Assembly, 2025)

Note on documents and status: The materials supplied include multiple, partly conflicting texts and legislative-action records (including unrelated Illinois bill text and mixed legislative-history entries). This summary focuses on the Arkansas HB 1807 content contained in the DFA Amended Fiscal Impact Statement and the engrossed bill language (As Engrossed H4/7/25). The overall procedural status in the supplied materials is inconsistent; the user-provided “Status: Died In Committee” conflicts with other action logs. Readers should confirm the official legislative record for final status.

Main purpose

To revise and clarify Arkansas’s sales-and-use tax exemption for aircraft purchased for resale and used for rental or charter, by (1) defining who qualifies as a “business of selling aircraft,” (2) imposing a minimum leasing/rental revenue test to qualify for the exemption, and (3) clarifying that related-party (non–arm’s-length) lease transactions do not defeat the exemption.

Key provisions and changes

  • Eligibility and permit: Any person—business or individual—“engaged in the business of selling aircraft,” holding a retail sales tax permit and aircraft held as stock for resale, may purchase aircraft exempt as inventory and use them for rental/charter without sales/use tax for a limited time.
  • Usage timeframe:
    • Standard: up to 1 year from purchase to use an aircraft for rental/charter without tax (to avoid taxable withdrawal from inventory).
    • Extended: up to 2 years if the purchased aircraft requires substantial modification or refurbishing prior to resale.
  • Definition: “Business of selling aircraft” is defined as the purchase of aircraft for stock in trade and management of aircraft inventory for the primary purpose of generating profit from the resale of aircraft to customers. (A House amendment removed language that had referenced rental/lease/charter in the definition.)
  • Revenue threshold: A person claiming the exemption for an aircraft used in renting/leasing must establish that annual gross revenue from renting/leasing (including related‑party revenues) is at least 7.5% of the aircraft’s net acquisition price (including trade/exchange value, excluding third-party sales commissions). DFA must promulgate rules to specify the evidentiary method for showing compliance.
  • Related-party transactions: The exemption applies regardless of any relationship between lessor and lessee—i.e., non–arm’s-length leasing does not by itself disqualify the exemption.
  • Effective date: Sections 1 and 2 take effect on the first day of the calendar quarter following the bill’s effective date.

Fiscal impact (DFA estimates)

  • Estimated state sales and use tax loss:
    • FY2026 (estimated effective date 10/1/2025 — eight months): approximately −$1,066,667 (distributed among Aviation/Aeronautics, Property Tax Relief, Conservation Fund, Educational Adequacy, Highway Fund, and other accounts).
    • FY2027: approximately −$1,600,000 (breakdowns provided by DFA across specific funds).
  • Estimated local (city/county) tax loss: minimal.
  • DFA notes resources/time for implementation are adequate; websites/manuals may need updating.

Who is affected

  • Primary: Businesses and individuals that purchase aircraft as inventory for resale and that also rent/lease/charter those aircraft.
  • State agencies: Department of Finance and Administration (rulemaking and enforcement); multiple state funds receiving sales tax revenue.
  • Indirect: Parties to related‑party leases (clarification affects tax treatment of such transactions).

Procedural/timeline notes

  • Introduced January 9, 2025; engrossed version dated 4/7/2025 appears in provided text. DFA fiscal analyses dated 4/4/2025.
  • The bill text specifies a future effective-quarter start date (first day of the calendar quarter following enactment).
  • Because the supplied record mixes materials and shows conflicting legislative actions, consult the official Arkansas General Assembly or DFA records for current status and enactment details.

Compiled from official sources — confirm details with the bill’s official record.

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