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SB 2399

RELATING TO A GENERAL EXCISE TAX EXEMPTION FOR AIRCRAFT MAINTENANCE.

2026 Regular Session Introduced by Lorraine Inouye

Hawaii bill exempts aircraft maintenance services from the 4% general excise tax to reduce airline operational costs and potentially improve aviation industry competitiveness.

Report adopted; Passed Third Reading, as amended (SD 2). Ayes, 25; Aye(s) with reservations: none . Noes, 0 (none). Excused, 0 (none). Transmitted to House.
#aircraftserviceandmaintenance #generalexcisetax #taxation
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Bill Summary · SB 2399

Legislative bill overview

SB 2399 creates a general excise tax exemption for aircraft maintenance services in Hawaii. This would allow maintenance, repair, and related services on aircraft to avoid the state's 4% general excise tax that normally applies to most business activities.

Why is this important

Aircraft maintenance is a significant operational cost for airlines and aviation businesses operating in Hawaii. This exemption could reduce expenses for carriers serving the islands, potentially affecting airfares, airline profitability, and competitiveness of Hawaii's aviation industry. It also represents a tax revenue loss that the state would need to address through other means or accept as reduced income.

Potential points of contention

  • Revenue impact: Removing excise tax on aircraft maintenance reduces state tax collection with unclear estimates of fiscal loss, affecting funding for other state services
  • Fairness concerns: Exempting one industry sector while others pay full excise taxes raises equity questions about preferential treatment and potential pressure from other industries for similar exemptions
  • Economic benefit clarity: Uncertain whether cost savings actually translate to lower consumer airfares or remain as increased airline profits rather than benefiting Hawaii residents

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

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