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HB 4119

Sales tax: exemptions; purchase of certain aircraft and aviation equipment; exempt. Amends sec. 4x of 1933 PA 167 (MCL 205.54x).

2025-2026 Regular Session Introduced by Joey Andrews and 18 co-sponsors

Michigan expands sales-tax exemptions for aircraft and parts to boost aviation maintenance and activity, broadening eligibility while costing $4-5 million/year in revenue.

referred to Committee on Rules
#aeronautics:other #salestax:exemptions
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Bill Summary · HB 4119

Summary — HB 4119 (General Sales Tax Act; MCL 205.54x) — Aviation equipment exemptions

Status: Placed on third reading (introduced March 7, 2025)
Primary sponsor (Michigan): Rep. Steve Frisbie
Note: The materials provided also included an unrelated Illinois HB4119 text; this summary addresses the Michigan HB 4119 that would amend MCL 205.54x (General Sales Tax Act).

Purpose

HB 4119 expands and clarifies Michigan sales-tax exemptions for aircraft and parts to encourage aviation maintenance, sales, and related activity in the state by broadening which aircraft and aircraft parts qualify for exemption.

Key provisions

  • Expands the existing sales tax exemption scope:
    • Continues to exempt sales to a domestic air carrier of aircraft with a maximum certificated takeoff weight of at least 6,000 pounds used solely to transport cargo and/or passengers.
    • Broadens the exemption for parts and materials (excluding shop equipment and fuel) so the sale or purchase of parts/materials affixed or to be affixed to an aircraft is exempt without the prior 6,000‑pound threshold.
  • Retains and clarifies the temporary-location exemption:
    • Sales/purchases of aircraft located in Michigan are exempt if the aircraft leaves Michigan within 15 days after the sale and any associated prepurchase evaluation/customization/repair/maintenance, and the aircraft is not based or registered in Michigan after completion.
  • Adds definitions and clarifications:
    • “Aircraft” defined as an aerial vehicle used in aviation (excluding unmanned aerial vehicles).
    • “Based in this state” defined as hangared/stored in Michigan for at least 10 days in at least 3 nonconsecutive months during the preceding 12‑month period.
  • Adds an exemption for sale of an aircraft to a person for subsequent lease to a domestic air carrier operating under FAA 14 CFR part 121 for regularly scheduled passenger service.
  • Legislative intent language: states intent to annually appropriate funds from the state general fund to the State School Aid Fund to fully compensate any School Aid Fund revenue loss (nonbinding on future legislatures).
  • Effective date: 90 days after enactment. Neither HB 4119 nor companion HB 4120 (Use Tax Act changes) can take effect unless both are enacted.

Who would be affected

  • Aircraft owners and operators (including noncommercial/general aviation) — broader parts exemptions reduce tax on maintenance/repair.
  • Repair stations, maintenance/overhaul providers and suppliers — could attract more work to Michigan.
  • Domestic air carriers and leasing entities — continue/expand exemptions for certain aircraft sales.
  • State finances and school aid funding — loss of tax revenue may affect allocations unless offset by appropriations.

Fiscal impact

  • Estimated reduction in sales and use tax revenue: approximately $4.0–$5.0 million per year (primarily from broadening parts/materials exemption).
  • Distribution implications: about 73% of sales tax revenue is constitutionally earmarked to the State School Aid Fund; use tax splits differently (approx. 57% general fund / 43% School Aid Fund after certain allocations).
  • Department of Treasury projected little revenue change from the aircraft-sale expansion (sales often structured to avoid MI taxes).

Procedural / stakeholder notes

  • Reported from House Finance Committee (recommended without amendment, 5‑6‑2025).
  • Supporters (testimony): Michigan Business Aviation Association, Pentastar Aviation, airports, airport execs, regional chambers, aerospace industry organizations, colleges with aviation programs.
  • Michigan Department of Treasury testified in opposition (concern about revenue loss).
  • Background: Similar bills passed both chambers in 2017–18 but were vetoed by the governor.

If you want, I can produce a plain‑language explainer of how the 15‑day and “based/registered” tests work in practice, or draft talking points for stakeholders (airports, schools, or state budget staff).

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

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