Aircraft LLCs in Texas: sales tax, exemptions, and the FAA trap

Texas has one of the largest general-aviation fleets in the country — the ramps at Addison, Sugar Land, David Wayne Hooks, and Austin Executive hold everything from flight-school 172s to fleets of corporate jets. The state taxes aircraft like any other tangible property — 6.25% state sales or use tax, plus up to 2% local — but it also hands owners more genuinely workable exemptions than almost any other state: a real occasional-sale exemption for private-party deals, a fly-away exemption for out-of-state buyers, and carve-outs for flight schools, certificated carriers, and agricultural operators. An LLC is often the right container for the plane — for liability and co-ownership reasons — but it changes none of that tax math.

This guide is general information, not legal or tax advice. Aircraft ownership sits where FAA regulation, state tax, and insurance overlap; an aviation attorney and a CPA who knows aircraft are worth every dollar before you close.

The baseline: 6.25% plus local tax

Texas imposes its 6.25% state sales and use tax on aircraft sold, used, or stored in the state, and — unlike states that exempt aircraft from local rates — local sales and use taxes of up to 2% stack on top, for a maximum combined rate of 8.25%. The Comptroller’s aircraft publication, Pub. 94-168, is the controlling plain-English reference. A dealer or broker collects the tax at sale; if the seller doesn’t collect it and no exemption applies, the buyer owes use tax directly on Form 01-156.

State rate

6.25%

sale, use, or storage

Local add-on

up to 2%

8.25% combined max

Fly-away filing

30 days

Form 01-907 to Comptroller

Ag-use threshold

95%

qualifying agricultural use

On a $500,000 aircraft, the difference between taxable and exempt is $31,250 to $41,250 — which is why the exemptions below get negotiated into every serious Texas aircraft closing.

The exemptions that actually matter

Texas codifies its aircraft exemptions in Tax Code § 151.328, with the mechanics in Comptroller Rule 3.280. Four come up constantly:

The occasional sale — Texas’s quiet gift to private-party buyers

A purchase qualifies as a tax-free occasional sale when the seller is not in the business of selling, leasing, or renting taxable items and the buyer does not hold — and is not required to hold — a Texas sales and use tax permit. Document it with Form 01-917, Statement of Occasional Sale. A retired owner selling his personal Bonanza to another individual is the classic fit; the same airplane bought through a dealer is not. This is far friendlier than states with no occasional-sale relief for aircraft at all — but both sides of the test matter, so confirm the seller’s status before you wire funds.

The fly-away exemption — for buyers taking the plane out of Texas

Texas sells a lot of airplanes to out-of-state buyers, and § 151.328(a)(4) is why that works: an aircraft is exempt when it’s sold for use and registration in another state or country before any use in Texas other than flight training and transporting the aircraft out of the state. The Comptroller also tolerates pre-departure completion, repair, maintenance, troubleshooting and test flights, and ferry flights between service locations.

Flight schools, certificated carriers, and ag operators

• Flight schools and instructors. Aircraft used to provide FAA-recognized flight instruction can be purchased and leased tax-free — the operator needs a Texas sales-tax permit and a current FAA flight school or instructor certificate, and students can even rent tax-free for FAA-approved instruction, including solo flights.
• Certificated carriers. The carrier exemption goes to operators the FAA has certificated to carry persons or property under 14 CFR Part 121, 125, 133, or 135. Note what that means for the “interstate commerce” idea: Texas has no general exemption for a Part 91 business plane that merely crosses state lines — the exemption requires actual carrier certification.
• Agricultural use. Aircraft used at least 95% of the time for qualifying agricultural work — crop dusting, pollination, seeding, predator control, livestock and wildlife surveys and captures — are exempt; exceed the 5% allowance of other use and the tax comes due.

Leasebacks are not automatic “resale”

Buying the plane in an LLC and leasing it out doesn’t automatically qualify as a tax-free sale for resale. Under Rule 3.280, a purchase for lease qualifies only if more than 50% of the aircraft’s departures during the first year are made under the operational control of someone other than the purchaser, under written lease agreements, for real consideration. A paper lease to yourself doesn’t clear that bar — and this is exactly the kind of structure to price with an aviation CPA before relying on it.

Bringing a plane into Texas: the use-tax presumption

Buy the aircraft somewhere else and move to Texas, and the Comptroller starts from a presumption: an aircraft brought into Texas by its direct purchaser is presumed to have been purchased for use in Texas and owes the 6.25% use tax (plus applicable local tax). Two things rebut or soften that:

• The one-year predominant-use rule. The aircraft escapes Texas use tax if it was predominantly used outside Texas for one year — again, more than 50% of total departures from out-of-state locations — measured from the later of the acquisition date or first flight. A plane you genuinely based and flew elsewhere for that first year generally comes in clean.
• Credit for tax paid elsewhere. Texas allows a credit for legally imposed sales or use tax paid to another state or its subdivisions — pay 4% somewhere else and Texas collects the difference, not the full stack.

Registration: the FAA and nobody else

Texas runs no state aircraft registry — unlike Arizona’s 60-day ADOT registration, there’s no state filing, sticker, or annual aviation fee for a Texas-based aircraft. The only registration is the FAA’s Civil Aviation Registry, with its citizenship rules. Under 14 CFR 47.2, an LLC is measured as a corporation or association: its president and at least two-thirds of its managing officers must be U.S. citizens, it must be under the actual control of U.S. citizens, and U.S. citizens must own or control at least 75% of the voting interest. A member-managed LLC whose members are all U.S. citizens clears that test comfortably — a non-citizen member or manager can knock it out. When an LLC owns the plane, the registry requires one of two things alongside the AC Form 8050-1 application: a copy of the organizing document (certificate of formation, articles, or operating agreement) naming every member and stating whether management is vested in the members, a manager, or officers — with each person’s citizenship — or a signed written representation setting out the same facts and explaining how the company qualifies as a U.S. citizen (see the FAA’s LLC information sheet). Get the member list right at formation.

The property-tax angle — where the LLC can backfire

Here’s a Texas-specific wrinkle most aircraft-LLC articles skip. Texas has no state income tax, but counties levy ad valorem property tax on business personal property. Under Tax Code § 11.14, tangible personal property is exempt when it’s not held or used for production of income — which is why a purely personal airplane typically draws no county tax bill (though the statute lets a taxing unit vote to tax otherwise-exempt personal property, so check locally).

The flight department company trap

This is the single most important warning in this guide, and it has nothing to do with Texas — it applies on every ramp in the country.

The FAA calls it the flight department company problem. When an LLC’s only business is owning and operating an aircraft for its own members, the entity’s business is transportation by air. 14 CFR 119.1 applies Part 119’s certification requirements to anyone operating civil aircraft as an air carrier or commercial operator in air commerce — and under the FAA Chief Counsel’s long-running interpretations, money flowing to that entity in connection with flights, even routine cost reimbursements from its own members, can count as compensation. Compensation plus carriage equals a commercial operation, and a commercial operation requires an air carrier or commercial operator certificate (think Part 135) that the LLC almost certainly doesn’t hold.

So where should the LLC be formed?

Separate the two questions. Where the aircraft is taxed — that’s Texas, full stop, if the plane is sold, based, and flown here; the 6.25% analysis and the county property-tax question follow the aircraft no matter where the entity was born. Where the holding LLC is formed — that’s a genuine choice about the entity’s cost, privacy, and structure:

• A Texas LLC keeps everything in one state: $300 to form, no annual report, no state income tax — just the May 15 franchise-tax report and Public Information Report each year, with $0 franchise tax due at or below the $2.65 million no-tax-due revenue threshold (report year 2026). For a plane that lives at Addison or Sugar Land, this is usually the clean answer.
• A Wyoming holding company adds privacy (members stay off the public record) and low annual fees; Delaware brings well-worn entity law for multi-partner ownership. Neither changes a dollar of the Texas tax math above — and an out-of-state LLC that itself does business in Texas must register as a foreign entity at a $750 state fee, more than double the domestic filing.

Where FilingDesk fits

FilingDesk forms the holding LLC that will own the aircraft — describe it in plain English, we run the name check, prepare and file the paperwork with a human specialist reviewing every filing, then handle the EIN and operating agreement your aviation attorney can build the dry lease on. $99 flat plus the state fee: Wyoming $199 all-in, Delaware $209, Florida $224, with a 60-day money-back guarantee and no upsells. Texas formation is on the FilingDesk roadmap — today, the practical route is a Wyoming, Delaware, or Florida holding LLC, or filing the Texas entity directly with the Secretary of State. The Texas sales-tax planning, the 01-907 clock, and the lease structuring stay with you and your aviation attorney and CPA — that’s their lane, and the math above is the same no matter who forms your entity. When your counsel signs off on the structure, start the entity.

Frequently asked questions

Sources

• Texas Comptroller — Aircraft and the Texas Sales and Use Tax (Pub. 94-168)
• Texas Tax Code § 151.328 — Aircraft (sales-tax exemptions)
• 34 Tex. Admin. Code § 3.280 — Aircraft (use-tax presumption, predominant-use test, fly-away mechanics)
• Texas Tax Code § 11.14 — Tangible personal property not producing income (property-tax exemption)
• Texas Comptroller — Franchise Tax overview (May 15 report, no-tax-due threshold)
• Texas Secretary of State — Business Filings Fee Schedule (Form 806)
• eCFR — 14 CFR Part 47, Aircraft Registration (citizenship, LLC eligibility)
• FAA Aircraft Registry — Limited Liability Companies info sheet (LLC statement requirements)
• eCFR — 14 CFR 119.1 (when an air carrier / commercial operator certificate is required)

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