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Arkansas aerospace and aviation tax incentives: sales tax exemptions and what they cover

By the Tax Field Guide editorial team. Published 2026-11-06. Facts checked 2026-11-06. Related strategies: Purchased Energy Credits.

Education only; not tax, legal or investment advice. Tax rules change, and how they apply depends on your facts. No outcome is guaranteed.

Arkansas markets itself as an aerospace and aviation state, and its tax code has several sales and use tax exemptions aimed at aircraft manufacturing, maintenance and parts. This guide summarizes the statute text from the Arkansas Code and the Arkansas Economic Development Commission (AEDC) and Department of Finance and Administration (DFA) descriptions. It is not a list of income tax "aerospace credits"; most of the aviation-specific rules are exemptions from gross receipts or compensating use tax. For every Arkansas incentive we track, see the Arkansas state page.

Commercial jet parts and repair (sales tax)

Arkansas exempts from the gross receipts tax:12

"Commercial jet aircraft" means a commercial, military, private or other turbine or turbojet aircraft with a certified maximum take-off weight of 12,500 pounds or more.12 AEDC's sales and use tax page lists the same parts-and-services exemption among the state's published exemptions.3

These rules matter for maintenance, repair and overhaul (MRO) shops and parts suppliers that work on qualifying jets. They do not automatically cover every aircraft: piston aircraft and lighter jets below the weight threshold are outside this definition.

Aircraft brought into Arkansas for work (use tax)

Separately, the compensating (use) tax does not apply to aircraft, aircraft equipment, or tangible personal property owned or leased by aircraft, airmotive or railroad companies when brought into Arkansas solely for:4

  1. Refurbishing, conversion or modification in Arkansas, if the property is not used or intended for use in the state and is removed within 60 days after that work is finished; or
  2. Storage for use inside or outside Arkansas, for any length of time.

If the property is later first used in Arkansas, use tax becomes due.4 This is the rule that supports bringing aircraft into the state for hangar work without triggering use tax on the aircraft itself, when the statutory conditions are met.

New aircraft built in Arkansas for exclusive out-of-state use

Gross receipts from the sale of new aircraft manufactured or substantially completed in Arkansas are not subject to the gross receipts tax when the manufacturer or substantial completer sells to a purchaser for use exclusively outside Arkansas. Taking possession in Arkansas only to fly the aircraft out under its own power does not defeat the exemption.5 AEDC lists this exemption on its sales and use tax page,3 and DFA's tax expenditure report tracks it as a large aircraft-related exemption.6

Sales of certain aircraft that will be based outside Arkansas

Another statute exempts the sale of an aircraft in Arkansas from gross receipts and use tax when:7

What about income tax credits labeled "aerospace"?

Arkansas's published business credit list (Advantage Arkansas payroll credits, ArkPlus investment credits, recycling equipment, research, film, historic rehab and others) is not limited to aerospace, and DFA does not publish a stand-alone "aerospace income tax credit."8 Aerospace and aircraft-maintenance firms can still qualify for general AEDC incentives when they meet the program rules. For example, the Existing Workforce Training Act expressly includes air transport businesses primarily engaged in aircraft maintenance, repair and testing (NAICS 488190) among eligible industries.8 Discretionary investment incentives under the Consolidated Incentive Act (including the up-to-10% investment credit for tax years beginning on or after January 1, 2026) are offered by AEDC based on county tier, investment and new payroll, not on an aerospace-only statute.9

If a promoter pitches an "Arkansas aerospace tax credit" as a transferable income tax credit you can buy, ask which Arkansas Code section creates it. The aviation-specific rules above are sales and use tax exemptions, not transferable income tax credits. See how state tax credit transfers work and questions to ask a tax credit broker.

Finding help

Tax Field Guide does not yet list Arkansas advisors in the directory. Start with how to find a tax mitigation advisor, and confirm any sales tax exemption claim against the statute and DFA guidance before relying on it. State pages and the advisor directory are updated as we verify public firm pages.

Common questions

Does Arkansas have an aerospace income tax credit?

Arkansas does not publish a stand-alone aerospace income tax credit on the DFA business incentives list. The aviation-specific rules are mainly sales and use tax exemptions for qualifying commercial jet parts and repair, for aircraft brought in for refurbishing, and for certain new or out-of-state-based aircraft sales. Aerospace firms may still qualify for general AEDC programs such as workforce training or discretionary investment credits when they meet those programs' rules.

What aircraft qualify for the commercial jet parts and repair exemption?

A commercial, military, private or other turbine or turbojet aircraft with a certified maximum take-off weight of 12,500 pounds or more. Parts and services for lighter or non-turbine aircraft are outside that statutory definition.

Is sales tax due when a new Arkansas-built aircraft is sold for use only outside the state?

Generally no, when a new aircraft manufactured or substantially completed in Arkansas is sold by the manufacturer or substantial completer to a purchaser for exclusive use outside Arkansas. Possession taken in Arkansas only to remove the aircraft under its own power does not defeat the exemption.

Does bringing an aircraft into Arkansas for hangar work create use tax?

Not under Ark. Code § 26-53-115 when the aircraft (or related equipment) is brought in solely for refurbishing, conversion or modification, is not used or intended for use in Arkansas, and is removed within 60 days after that work is completed, or when it is only stored. First use in Arkansas can make use tax due.

Education only; not tax, legal or investment advice. Talk to a qualified professional before acting.

Sources

  1. Ark. Code § 26-52-401(28) (commercial jet aircraft parts and incorporation services), https://law.justia.com/codes/arkansas/title-26/subtitle-5/chapter-52/subchapter-4/section-26-52-401/
  2. 26 CAR § 30-1104 (repair of commercial jet aircraft; parts incorporated into commercial jet aircraft), https://codeofarrules.arkansas.gov/Rules/Rule?chapterID=33&levelType=section&partID=971&sectionID=63013&subChapterID=241&subPartID=9369&titleID=26
  3. Arkansas Economic Development Commission, Sales and Use Tax, https://www.arkansasedc.com/why-arkansas/business-climate/tax-structure/sales-and-use-tax
  4. Ark. Code § 26-53-115 (use tax exemption for certain aircraft and equipment brought in for refurbishing or storage), https://law.justia.com/codes/arkansas/title-26/subtitle-5/chapter-53/subchapter-1/section-26-53-115/
  5. Ark. Code § 26-52-505(c) (new aircraft manufactured or substantially completed in Arkansas for exclusive out-of-state use), https://law.justia.com/codes/arkansas/title-26/subtitle-5/chapter-52/subchapter-5/section-26-52-505/
  6. Arkansas DFA, Sales Tax Exemptions FY2025 (aircraft completed in state for use outside Arkansas), https://www.dfa.arkansas.gov/wp-content/uploads/SalesTaxExemptionsFY2025.pdf
  7. Ark. Code § 26-52-451 (sales of certain aircraft based outside Arkansas), https://law.justia.com/codes/arkansas/title-26/subtitle-5/chapter-52/subchapter-4/section-26-52-451/
  8. Arkansas DFA, Business Incentives and Credits, https://www.dfa.arkansas.gov/office/taxes/tax-credits-special-refunds/business-incentives-and-credits/
  9. Ark. Code § 15-4-2706 (investment tax incentives; tax years beginning on or after Jan. 1, 2026), https://law.justia.com/codes/arkansas/title-15/subtitle-1/chapter-4/subchapter-27/section-15-4-2706-d-1/

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Education only; not tax, legal or investment advice.