Aircraft LLC in California (2026): Use Tax & $800 Rule

Short answer: no LLC — California, Wyoming, Delaware, or Montana — lowers California’s use tax or county property tax on a plane based here, and an LLC holding a California-based plane almost always owes California’s $800 annual tax. Since September 30, 2026, the members and managers of a “shell” LLC used to avoid use tax can also be held personally liable for it.

California has one of the biggest general-aviation communities in the country — Montgomery-Gibbs, Gillespie Field, and McClellan-Palomar around San Diego; John Wayne in Orange County; Van Nuys and Torrance in greater Los Angeles, Camarillo in Ventura County; San Carlos, Palo Alto, and Livermore around the Bay. It also has the most layered aircraft tax regime an owner is likely to meet: use tax when you buy, property tax every year you own, and a franchise tax on the entity that holds the plane. Most of that bill has nothing to do with whether you use an LLC.

This guide is general information, not legal or tax advice — California aircraft tax is genuinely specialist territory, and an aviation attorney or CPA who works these rules is worth every dollar.

Key takeaways

Use tax applies to most private-party and out-of-state aircraft purchases, self-reported to the CDTFA, and it’s due within 12 months of the purchase month regardless of whether anyone bills you.
Property tax hits every year: county assessors appraise aircraft annually at market value, starting from the BOE-approved Aircraft Bluebook, and the bill runs roughly 1% of that value plus local add-ons.
The $800 annual LLC franchise tax follows an aircraft that “does business” in California — and an in-state plane usually blows past the $75,707 property threshold on its own.
An out-of-state LLC (Wyoming, Delaware, Montana) is real for liability and co-ownership — it just doesn’t avoid any of the three taxes above: California’s use and property taxes follow the plane, not the entity’s home state, and the LLC itself is what triggers the $800. Since September 30, 2026, a “shell” LLC used to dodge use tax also exposes its owners to personal liability for it.

Use-tax rate range: 7.25%–11.75%; by hangar location (Oct. 2026)
Commerce exemption: 50%+; commercial interstate flight time, first 6 months
Assessor start point: 90%; of Aircraft Bluebook retail, then adjusted
Shell-LLC rule: Sept. 30, 2026; SB 1406: shell-LLC owners liable for unpaid use tax

An LLC is still often the right way to own an aircraft here — for liability and co-ownership reasons that have nothing to do with tax. But you should walk in knowing what the LLC does and doesn’t change. One transfer trap: contributing a plane you already own to a newly formed LLC solely for a membership interest generally isn’t a sale, but if the LLC takes over your loan or pays you anything, California treats the transfer as a sale and use tax applies to that consideration (CDTFA Regulation 1595).

Tax #1: use tax when you buy

California dealers collect sales tax on aircraft they sell. But most GA transactions aren’t dealer sales — they’re private-party purchases, and those come with use tax instead, self-reported by the buyer to the CDTFA (California Department of Tax and Fee Administration). Use tax also applies when you buy out of state and bring the plane home.

Two details owners consistently get wrong:

The rate follows the hangar, not your house. Use tax is charged at the rate in effect where you principally hangar the aircraft. Combined rates in the CDTFA’s table effective October 1, 2026 run from 7.25% at Camarillo and 7.75% at Montgomery-Gibbs (San Diego) and McClellan-Palomar (Carlsbad), to 8.25% at Gillespie (El Cajon), 9.375% at San Carlos, 9.75% at Palo Alto, 10.25% at Van Nuys (City of Los Angeles) and Livermore, and 10.75% at Torrance. On a $250,000 airplane that’s $18,125 at Camarillo versus $26,875 at Torrance. Rates change quarterly — check your hangar’s address at maps.cdtfa.ca.gov.
You’re on a clock even if nobody bills you. The CDTFA expects self-reporting. Payment is due no later than the twelfth month following the month of purchase — or the month after the CDTFA contacts you, whichever comes first. Aircraft are easy to find: FAA registration is public, and airports and county assessors keep track of based aircraft.

The 12-month test and the interstate-commerce exemption

California doesn’t tax aircraft that genuinely weren’t purchased for use in California, and the dividing line is the 12-month test. An aircraft purchased out of state and brought into California within 12 months of purchase is presumed to have been purchased for California use — and taxable — if any of these holds: the buyer is a California resident — and for this test a closely held LLC counts as one when California residents hold 50% or more of its membership interests, or, since SB 1406 took effect on September 30, 2026, when it’s a “shell company” (one used to evade the tax) with even one California-resident member or beneficial owner; the aircraft is subject to California property tax during the first 12 months of ownership; or a nonresident buyer keeps it in California more than half the time during those first 12 months. The presumption is rebuttable, but rebutting it means real evidence: flight logs, hangar invoices, out-of-state basing records. Bring the plane in after twelve months of genuine use elsewhere and it’s generally outside the presumption. A plane brought in within the first 12 months exclusively for repair, retrofit, or modification at an FAA-certified repair station or a manufacturer’s maintenance facility isn’t treated as acquired for California use.

New for 2026: California's shell-LLC rule (SB 1406)

Effective September 30, 2026, SB 1406 tightened the 12-month test for entities. A closely held LLC already counted as a California resident if Californians held 50% or more of its membership interests. Now a “shell company” — an entity used to evade the tax — is a California resident if any member or beneficial owner is. Evidence of a shell includes lacking a specific business purpose, having no physical location outside California, having no W-2 employees, or not filing federal returns or required returns in another state. Under new R&TC 6829.5, if the CDTFA shows a shell kept or used the plane in California within 12 months of purchase without paying the tax, its officers, managers, members, and beneficial owners are personally liable for the tax, interest, and penalties. The CDTFA has about three years from when it learns of the in-state use to bill.

There’s also a working interstate/foreign commerce exemption: broadly, if you took delivery outside California, the aircraft’s first functional use is outside California, and, during the six months immediately following its first entry into the state, half or more of its flight time is commercial flight in interstate or foreign commerce — “commercial” meaning business use, not personal trips — use tax may not apply. The CDTFA audits these claims hard — business-purpose documentation for each qualifying flight is the norm, not the exception. A common-carrier exemption also exists for aircraft genuinely used more than 50% in common carriage during the first 12 months; it’s a real exemption with real requirements, not a checkbox, and structuring into it is attorney-and-CPA work, not blog-post work.

Tax #2: county personal property tax, every year

This is the one out-of-state buyers don’t see coming. In California, aircraft are taxable personal property, and the county assessor appraises them every year at market value as of the January 1 lien date. Assessors don’t guess — the BOE has approved the Aircraft Bluebook as the primary value guide (Vref as the alternate), and assessors start from 90% of its listed retail, then adjust for equipment, overall condition, total hours, and hours since major overhaul (Assessors’ Handbook 577). The bill lands on the unsecured roll of the county where the plane is habitually hangared, at roughly the 1% Proposition 13 base levy plus voter-approved local add-ons.

Concretely: a $200,000 Bonanza tied down at Camarillo generates a property tax bill on the order of $2,000+ a year, for as long as you own it. Counties cross-reference FAA registration data and airport tenant lists, and most send aircraft property statements to owners annually.

The exemptions are narrow — and one is off-limits to LLCs

Some counties exempt low-value property — Orange County’s low-value exemption is $10,000 — and California exempts aircraft of historical significance (R&TC 220.5): planes 35 or more years old (or a type with fewer than five known to exist), not used commercially or for general transportation, and available for public display at least 12 days a year, claimed annually on Form BOE-260-B. It can apply to an airworthy plane you actually fly — the BOE’s handbook says recreational flying, maintenance flights, flights to keep your pilot certificate current, and trips to air shows aren’t “general transportation.” But only an individual owner can claim it, not an LLC or other legal entity, so moving a qualifying older plane into an LLC gives the exemption up.

Note the interaction with the 12-month test above: becoming subject to California property tax is itself one of the triggers that presumes your purchase was for California use.

Tax #3: the $800 rule — the entity gets taxed too

California charges every LLC that is organized in California, registered with the California Secretary of State, or “doing business” in California an $800 annual franchise tax, plus an LLC fee at higher income levels and a Form 568 filing (due dates and fee tiers are in our $800 franchise tax guide). One new wrinkle: under R&TC §17941(g)(2), an LLC whose first taxable year begins in 2027 through 2029 pays $400 instead of $800 for that first year only.

The phrase doing the heavy lifting is doing business. The FTB defines it as actively engaging in any transaction for financial gain — and backs that with bright-line thresholds under R&TC 23101: you’re doing business in California if your in-state sales, property, or payroll exceed annually indexed amounts (for 2025, roughly $757,070 of sales or $75,707 of property or payroll, or 25% of your totals). An airplane is property. Almost any airworthy airplane hangared in California blows through the property threshold by itself — which is how a Wyoming LLC whose only asset is a Cirrus at Palo Alto ends up with California filing obligations and an $800-a-year habit.

So is an out-of-state LLC pointless in California?

No — it’s just not a tax dodge. The scorecard for a Wyoming or Delaware holding LLC with a California-based aircraft:

Goal	Does an out-of-state LLC help?
Liability separation from your other assets	Yes — that’s entity law, and it travels (though it never covers your own flying). One exception since Sept. 30, 2026: if the LLC is a “shell” used to avoid California use tax, its members, managers, officers and beneficial owners are personally liable for that unpaid tax, interest and penalties (R&TC 6829.5)
Privacy (members off the public formation record)	Partly — Wyoming’s own filings don’t list members, but if the LLC registers with the California Secretary of State (generally required once it transacts business here), its Statement of Information (Form LLC-12, every two years) publicly lists each manager — or, if none, each member — with an address
Co-ownership structure / clean partner buy-in and buy-out	Yes — operating agreement does the work
Avoiding California use tax	No — tax follows the hangar
Avoiding county property tax	No — assessed where the plane lives
Avoiding the $800 franchise tax	Usually no — a CA-based plane typically means “doing business” in CA

The practical playbook

1
Decide the ownership structure first

Solo, partnership, or LLC — work through the general aircraft-LLC tradeoffs before you price anything.
2
Price the California taxes into the purchase

Use tax at your hangar’s rate, plus ~1%+ of value per year in property tax, plus $800/year if an LLC is in the picture ($400 for a first taxable year beginning 2027–2029). None of it is optional, so it belongs in your budget, not a surprise pile.
3
Chasing an exemption? Engage an aviation tax professional before closing

Interstate-commerce and common-carrier exemptions are planned into a transaction, not claimed afterward.
4
Form the LLC where it makes structural sense

For California-based owners that’s often simply a California LLC; a Wyoming or Delaware holding company is legitimate when multi-state structuring matters, with the taxes above unchanged either way — and an out-of-state LLC formed mainly to sidestep California use tax is exactly what the 2026 shell-company rule is aimed at.
5
Paper the operations

Insurance in the LLC’s name, and leases that keep you out of Part 134½ territory.

Where FilingDesk fits

FilingDesk handles step 4: describe the holding company in plain English and we file it — a human specialist reviews every filing — then handle the EIN and operating agreement. $99 flat plus the state fee (Wyoming $199 all-in, Delaware $209, Florida $224), no upsells. California formation is on our roadmap; meanwhile, the use-tax and property-tax math above is the same no matter who forms your entity — budget for it honestly, and start the entity when your counsel signs off on the structure.

Frequently asked questions

Do I owe California use tax if I buy an airplane from a private party?

Generally yes. Private-party aircraft sales don't have a dealer collecting sales tax, so California use tax applies instead — at the rate for the location where you principally hangar the aircraft. You're expected to self-report to the CDTFA; payment is due no later than twelve months after the purchase month, or sooner if the CDTFA contacts you first. Exemptions exist (interstate commerce, common carrier), but they're documentation-heavy and fact-specific.

Can I avoid California use tax by buying my plane through a Wyoming, Delaware, or Montana LLC?

No. California use tax follows where the aircraft is based and used, not where the owning entity was formed. A Wyoming LLC that hangars its plane at Van Nuys owes California use tax exactly as a California owner would. For the 12-month test, a closely held LLC is itself a California resident when Californians hold 50% or more of its membership interests. Since September 30, 2026 (SB 1406), a 'shell company' counts as a California resident if any member or beneficial owner is one. A shell company is an LLC used to evade the tax; evidence includes no specific business purpose, no physical location outside California, no W-2 employees, or not filing federal returns or required returns in another state. Its members, managers, officers, and beneficial owners can be held personally liable for the unpaid use tax, interest, and penalties. Out-of-state LLCs are still legitimate for liability and co-ownership structuring; they just don't change the California tax result.

What is the 12-month test for aircraft in California?

An aircraft purchased outside California, first used outside California, and brought into the state within 12 months of purchase is presumed to have been purchased for California use — and is subject to use tax — if the buyer is a California resident (an LLC counts as one when California residents hold 50% or more of its membership interests, or, since September 30, 2026, when it's a shell company used to evade the tax with any California-resident member or beneficial owner), the aircraft is subject to California property tax during its first 12 months of ownership, or a nonresident buyer keeps it in California more than half the time during those 12 months. The presumption is rebuttable with flight logs, hangar records, and similar evidence. Separately, an exemption can apply if you took delivery outside California, the aircraft's first functional use was outside California, and half or more of its flight time in the six months after first entering California was commercial (business, not personal) flight time in interstate or foreign commerce.

How much is personal property tax on an airplane in California?

General-aviation aircraft are taxable personal property in California, assessed by the county assessor every year at market value as of the January 1 lien date — assessors typically start from the Aircraft Bluebook. The levy is roughly 1% of assessed value (the Proposition 13 base rate) plus any voter-approved local add-ons, so a $200,000 airplane runs on the order of $2,000+ a year, every year, billed on the unsecured roll of the county where the plane is habitually hangared.

Does an out-of-state LLC that owns a California-based plane owe the $800 franchise tax?

Very likely. California's $800 annual LLC tax applies to every LLC organized in California, registered with the California Secretary of State, or 'doing business' in California. The FTB's doing-business test includes a property threshold — for 2025, in-state property above the lesser of about $75,707 (indexed annually) or 25% of the LLC's total property — that almost any airplane exceeds on its own, and the FTB has said the thresholds aren't a safe harbor in the other direction. A Wyoming LLC whose main asset is a plane hangared in San Diego should budget for the $800 and a Form 568 filing, and get real advice from a CPA.

Sources

This guide is general information, not legal advice. FilingDesk is not a law firm.

Aircraft LLCs in California: what actually works

Tax #1: use tax when you buy

The 12-month test and the interstate-commerce exemption

Tax #2: county personal property tax, every year

Tax #3: the $800 rule — the entity gets taxed too

So is an out-of-state LLC pointless in California?

The practical playbook

Decide the ownership structure first

Price the California taxes into the purchase

Chasing an exemption? Engage an aviation tax professional before closing

Form the LLC where it makes structural sense

Paper the operations

Where FilingDesk fits

Frequently asked questions

Sources

Structure the entity; respect the tax.