SB 2399: Taxation; General Excise Tax; Aircraft Service and Maintenance
- Session Year: 2025-2026
- House: Senate
- Latest Version Date: 2026-03-23
Current Status:
Failed
(2026-03-24: Passed Second Reading as amended in HD 1 and referred to the committee(s) on FIN with none voting aye with reservations; none voting no (0) and Representative(s) Garrett, Quinlan excused (2).)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Final Decking
Enacted
What does this bill do?
The bill exempts from Hawaii’s general excise tax the sale of materials, parts, or tools sold to federally licensed airlines or aircraft operators for aircraft servicing and maintenance or to build aircraft maintenance facilities. It also defines who counts as a licensed airline and what qualifies as an aircraft, maintenance work, and a maintenance facility so suppliers and airlines know what purchases qualify.
The summary is provided by generative AI which can make mistakes. For original language, please view the details in the table below.
Provides a general excise tax exemption for the sale of material, parts, or tools used for aircraft service and maintenance or for the construction of an aircraft service and maintenance facility. Effective 7/1/3000. (HD1)
Provides a general excise tax exemption for the sale of material, parts, or tools used for aircraft service and maintenance or for the construction of an aircraft service and maintenance facility. Effective 7/1/2050. (SD2)
Provides a general excise tax exemption for the sale of material, parts, or tools used for aircraft service and maintenance or for the construction of an aircraft service and maintenance facility. Effective 1/1/2027. (SD1)
Provides a general excise tax exemption for the sale of material, parts, or tools used for aircraft service and maintenance or for the construction of an aircraft service and maintenance facility.
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THE SENATE |
S.B. NO. |
2399 |
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THIRTY-THIRD LEGISLATURE, 2026 |
S.D. 2 |
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STATE OF HAWAII |
H.D. 1 |
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A BILL FOR AN ACT
RELATING TO A GENERAL EXCISE TAX EXEMPTION FOR AIRCRAFT MAINTENANCE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that many states, including Arizona, California, Colorado, Connecticut, Florida, Georgia, Iowa, Kansas, Massachusetts, Minnesota, New York, North Carolina, Ohio, Pennsylvania, Texas, and Wisconsin, explicitly exempt aircraft parts from their sales tax if sold to a federally licensed aircraft carrier. In Hawaii, there is an exemption in the general excise tax law for aircraft servicing and maintenance. However, the Hawaii Intermediate Court of Appeals has recently decided that the exemption language does not exempt from the general excise tax the sale of parts to an aircraft carrier, even though the complementary use tax law explicitly exempts from the use tax imports of these parts from an out-of-state seller.
To correct this imbalance, recognize the critical importance of the airline industry to the State, and ensure competitiveness with other states in attracting and maintaining aircraft maintenance jobs and facilities, the purpose of this Act is to provide a general excise tax exemption for the sale of material, parts, or tools that are used for aircraft service and maintenance or for the construction of an aircraft service and maintenance facility.
SECTION 2. Section 237-24.9, Hawaii Revised Statutes, is amended to read as follows:
"§237-24.9
Aircraft service [and], maintenance facility[.],
and sale of related materials.
(a) This chapter shall not apply
to amounts received from the servicing and maintenance of aircraft [or],
from the construction of an aircraft service and maintenance facility in the
State[.], or from the sale of material, parts, or tools to a licensed
aircraft carrier if they are purchased for aircraft service and maintenance or
for the construction of an aircraft service and maintenance facility.
(b) [As used in] For the purposes of
this section:
"Aircraft" means any craft or artificial contrivance of whatever description engaged in intrastate, interstate, or international scheduled commercial use as defined in chapter 263, that operates with two or more jet engines.
"Aircraft
service and maintenance" means all scheduled and unscheduled tasks
performed within an aircraft service and maintenance facility for the
inspection, modification, maintenance, and repair of aircraft and related
components, including engines, hydraulic and electrical systems, and all
other components [which] that are an integral part of an
aircraft.
"Aircraft
service and maintenance facility" means a facility for aircraft service
and maintenance that is not less than thirty thousand square feet in area, and [which]
may include ancillary space [which] that is integral to the
facility, such as parts and inventory warehouse space, tool rooms, and related
administrative and employee space.
"Construction
of an aircraft service and maintenance facility" means all design,
engineering, labor, and material costs associated with the construction of
facilities the [[]principal[]] purpose of which is the provision
of facilities for aircraft service and maintenance.
"Licensed aircraft carrier" means an airline or aircraft operator that has an air carrier certificate from the Federal Aviation Administration and United States Department of Transportation pursuant to title 14 Code of Federal Regulations parts 121 and 135 to transport passengers or cargo.
"Maintenance"
means the upkeep of aircraft engines, hydraulic and electrical systems, and all
other components [which] that are an integral part of an
aircraft, but does not include refueling, janitorial services or cleaning,
restocking of aircraft and passenger supplies, or loading or unloading of cargo
and passenger baggage."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on July 1, 3000.
Report Title:
Taxation; General Excise Tax; Aircraft Service and Maintenance
Description:
Provides a general excise tax exemption for the sale of material, parts, or tools used for aircraft service and maintenance or for the construction of an aircraft service and maintenance facility. Effective 7/1/3000. (HD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
|
THE SENATE |
S.B. NO. |
2399 |
|
THIRTY-THIRD LEGISLATURE, 2026 |
S.D. 2 |
|
|
STATE OF HAWAII |
|
|
|
|
|
|
|
|
||
|
|
||
A BILL FOR AN ACT
RELATING TO A GENERAL EXCISE TAX EXEMPTION FOR AIRCRAFT MAINTENANCE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that many states, including Arizona, California, Colorado, Connecticut, Florida, Georgia, Iowa, Kansas, Massachusetts, Minnesota, New York, North Carolina, Ohio, Pennsylvania, Texas, and Wisconsin, explicitly exempt aircraft parts from their sales tax if sold to a federally licensed air carrier. In the State, there is an exemption in the general excise tax law for aircraft servicing and maintenance. However, the Hawaii Intermediate Court of Appeals has recently decided that the exemption language does not exempt from the general excise tax the sale of parts to an aircraft carrier, even though the complementary use tax law explicitly exempts from the use tax imports of these parts from an out-of-state seller. To correct this imbalance, recognize the critical importance of the airline industry to the State, and ensure competitiveness with other states, including those listed above, in attracting and maintaining aircraft maintenance jobs and facilities, the purpose of this Act is to provide a general excise tax exemption for the sale of material, parts, or tools that are used for aircraft service and maintenance or for the construction of an aircraft service and maintenance facility.
SECTION 2. Section 237-24.9, Hawaii Revised Statutes, is amended to read as follows:
"§237-24.9
Aircraft service, [and] maintenance facility[.],
and sale of related materials.
(a) This chapter shall not apply
to amounts received from the servicing and maintenance of aircraft [or],
from the construction of an aircraft service and maintenance facility in the
State[.], or from the sale of material, parts, or tools to a licensed
aircraft carrier if they are purchased for aircraft service and maintenance or
for the construction of an aircraft service and maintenance facility.
(b) [As used in] For the purposes of
this section:
"Aircraft" means any craft or artificial contrivance of whatever description engaged in intrastate, interstate, or international scheduled commercial use as defined in chapter 263, that operates with two or more jet engines.
"Aircraft service and maintenance" means all scheduled and unscheduled tasks performed within an aircraft service and maintenance facility for the inspection, modification, maintenance, and repair of aircraft and related components including engines, hydraulic and electrical systems, and all other components which are an integral part of an aircraft.
"Aircraft service and maintenance facility" means a facility for aircraft service and maintenance that is not less than thirty thousand square feet in area, and which may include ancillary space which is integral to the facility, such as parts and inventory warehouse space, tool rooms, and related administrative and employee space.
"Construction
of an aircraft service and maintenance facility" means all design,
engineering, labor, and material costs associated with the construction of
facilities the [[]principal[]] purpose of which is the provision
of facilities for aircraft service and maintenance.
"Licensed aircraft carrier" means an airline or aircraft operator that has an air carrier certificate from the Federal Aviation Administration and United States Department of Transportation pursuant to 14 C.F.R. Parts 121 and 135 to transport passengers or cargo.
"Maintenance" means the upkeep of aircraft engines, hydraulic and electrical systems, and all other components which are an integral part of an aircraft, but does not include refueling, janitorial services or cleaning, restocking of aircraft and passenger supplies, or loading or unloading of cargo and passenger baggage."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on July 1, 2050.
Report Title:
Taxation; General Excise Tax; Aircraft Service and Maintenance
Description:
Provides a general excise tax exemption for the sale of material, parts, or tools used for aircraft service and maintenance or for the construction of an aircraft service and maintenance facility. Effective 7/1/2050. (SD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
|
THE SENATE |
S.B. NO. |
2399 |
|
THIRTY-THIRD LEGISLATURE, 2026 |
S.D. 1 |
|
|
STATE OF HAWAII |
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|
|
|
|
|
|
|
||
|
|
||
A BILL FOR AN ACT
RELATING TO A GENERAL EXCISE TAX EXEMPTION FOR AIRCRAFT MAINTENANCE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that many states, including Arizona, California, Colorado, Connecticut, Florida, Georgia, Iowa, Kansas, Massachusetts, Minnesota, New York, North Carolina, Ohio, Pennsylvania, Texas, and Wisconsin, explicitly exempt aircraft parts from their sales tax if sold to a federally licensed air carrier. In the State, there is an exemption in the general excise tax law for aircraft servicing and maintenance. However, the Hawaii Intermediate Court of Appeals has recently decided that the exemption language does not exempt from the general excise tax the sale of parts to an aircraft carrier, even though the complementary use tax law explicitly exempts from the use tax imports of these parts from an out-of-state seller. To correct this imbalance, recognize the critical importance of the airline industry to the State, and ensure competitiveness with other states, including those listed above, in attracting and maintaining aircraft maintenance jobs and facilities, the purpose of this Act is to provide a general excise tax exemption for the sale of material, parts, or tools that are used for aircraft service and maintenance or for the construction of an aircraft service and maintenance facility.
SECTION 2. Section 237-24.9, Hawaii Revised Statutes, is amended to read as follows:
"§237-24.9
Aircraft service, [and] maintenance facility[.],
and sale of related materials.
(a) This chapter shall not apply
to amounts received from the servicing and maintenance of aircraft [or],
from the construction of an aircraft service and maintenance facility in the
State[.], or from the sale of material, parts, or tools to a licensed
aircraft carrier if they are purchased for aircraft service and maintenance or
for the construction of an aircraft service and maintenance facility.
(b) [As used in] For the purposes of
this section:
"Aircraft" means any craft or artificial contrivance of whatever description engaged in intrastate, interstate, or international scheduled commercial use as defined in chapter 263, that operates with two or more jet engines.
"Aircraft service and maintenance" means all scheduled and unscheduled tasks performed within an aircraft service and maintenance facility for the inspection, modification, maintenance, and repair of aircraft and related components including engines, hydraulic and electrical systems, and all other components which are an integral part of an aircraft.
"Aircraft service and maintenance facility" means a facility for aircraft service and maintenance that is not less than thirty thousand square feet in area, and which may include ancillary space which is integral to the facility, such as parts and inventory warehouse space, tool rooms, and related administrative and employee space.
"Construction
of an aircraft service and maintenance facility" means all design,
engineering, labor, and material costs associated with the construction of
facilities the [[]principal[]] purpose of which is the provision
of facilities for aircraft service and maintenance.
"Licensed aircraft carrier" means an airline or aircraft operator that has an air carrier certificate from the Federal Aviation Administration and United States Department of Transportation pursuant to 14 C.F.R. Parts 121 and 135 to transport passengers or cargo.
"Maintenance" means the upkeep of aircraft engines, hydraulic and electrical systems, and all other components which are an integral part of an aircraft, but does not include refueling, janitorial services or cleaning, restocking of aircraft and passenger supplies, or loading or unloading of cargo and passenger baggage."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on January 1, 2027.
Report Title:
Taxation; General Excise Tax; Aircraft Service and Maintenance
Description:
Provides a general excise tax exemption for the sale of material, parts, or tools used for aircraft service and maintenance or for the construction of an aircraft service and maintenance facility. Effective 1/1/2027. (SD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
|
THE SENATE |
S.B. NO. |
2399 |
|
THIRTY-THIRD LEGISLATURE, 2026 |
|
|
|
STATE OF HAWAII |
|
|
|
|
|
|
|
|
||
|
|
||
A BILL FOR AN ACT
relating to a general excise tax exemption for aircraft maintenance.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that many states, including Arizona, California, Colorado, Connecticut, Florida, Georgia, Iowa, Kansas, Massachusetts, Minnesota, New York, North Carolina, Ohio, Pennsylvania, Texas, and Wisconsin, explicitly exempt aircraft parts from their sales tax if sold to a federally licensed air carrier. In Hawaii, there is an exemption in the general excise tax law for aircraft servicing and maintenance. However, the Hawaii Intermediate Court of Appeals has recently decided that the exemption language does not exempt from the general excise tax the sale of parts to an aircraft carrier, even though the complementary use tax law explicitly exempts from the use tax imports of these parts from an out-of-state seller. To correct this imbalance, recognize the critical importance of the airline industry to the State, and ensure competitiveness with other states, including those listed above, in attracting and maintaining aircraft maintenance jobs and facilities, the purpose of this Act is to provide a general excise tax exemption for the sale of material, parts, or tools that are used for aircraft service and maintenance or for the construction of an aircraft service and maintenance facility.
SECTION 2. Section 237-24.9, Hawaii Revised Statutes, is amended by amending its title and subsection (a) to read as follows:
"§237-24.9
Aircraft service, [and] maintenance facility[.],
and sale of related materials.
(a) This chapter shall not apply
to amounts received from the servicing and maintenance of aircraft [or],
from the construction of an aircraft service and maintenance facility in the
State[.], or from the sale of material, parts, or tools to a licensed
aircraft carrier if they are purchased for aircraft service and maintenance or
for the construction of an aircraft service and maintenance facility."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on July 1, 2026.
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INTRODUCED BY: |
_____________________________ |
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Report Title:
Taxation; General Excise Tax; Aircraft Service and Maintenance
Description:
Provides a general excise tax exemption for the sale of material, parts, or tools used for aircraft service and maintenance or for the construction of an aircraft service and maintenance facility.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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Date
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Status
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|---|---|
| Mar 24, 2026 | Passed Second Reading as amended in HD 1 and referred to the committee(s) on FIN with none voting aye with reservations; none voting no (0) and Representative(s) Garrett, Quinlan excused (2). |
| Mar 24, 2026 | Reported from TRN (Stand. Com. Rep. No. 1332-26) as amended in HD 1, recommending passage on Second Reading and referral to FIN. |
| Mar 19, 2026 | The committee on TRN recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 8 Ayes: Representative(s) Kila, Miyake, Evslin, Grandinetti, La Chica, Cochran, Muraoka, Pierick; Ayes with reservations: none; Noes: none; and 1 Excused: Representative(s) Kitagawa. |
| Mar 16, 2026 | Bill scheduled to be heard by TRN on Thursday, 03-19-26 8:30AM in House conference room 430 VIA VIDEOCONFERENCE. |
| Mar 12, 2026 | Referred to TRN, FIN, referral sheet 17 |
| Mar 12, 2026 | Pass First Reading |
| Mar 10, 2026 | Received from Senate (Sen. Com. No. 229) in amended form (SD 2). |
| Mar 10, 2026 | 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. |
| Mar 5, 2026 | 48 Hrs. Notice 03-10-26. |
| Mar 5, 2026 | Reported from WAM (Stand. Com. Rep. No. 2844) with recommendation of passage on Third Reading, as amended (SD 2). |
| Mar 3, 2026 | The committee(s) on WAM recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in WAM were as follows: 12 Aye(s): Senator(s) Dela Cruz, Moriwaki, DeCoite, Elefante, Hashimoto, Inouye, Kanuha, Kidani, Kim, Lee, C., Richards, Wakai; Aye(s) with reservations: none ; 0 No(es): none; and 1 Excused: Senator(s) Fevella. |
| Feb 27, 2026 | The committee(s) on WAM will hold a public decision making on 03-03-26 10:17AM; Conference Room 211 & Videoconference. |
| Feb 10, 2026 | Report adopted; Passed Second Reading, as amended (SD 1) and referred to WAM. |
| Feb 10, 2026 | Reported from TRS (Stand. Com. Rep. No. 2138) with recommendation of passage on Second Reading, as amended (SD 1) and referral to WAM. |
| Feb 9, 2026 | Reported from TRS (Stand. Com. Rep. No. 2138) with recommendation of passage on Second Reading, as amended (SD 1) and referral to WAM. |
| Feb 3, 2026 | The committee(s) on TRS recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in TRS were as follows: 3 Aye(s): Senator(s) Inouye, Elefante, Lee, C.; Aye(s) with reservations: none ; 1 No(es): Senator(s) DeCorte; and 1 Excused: Senator(s) Kanuha. |
| Jan 28, 2026 | The committee(s) on TRS has scheduled a public hearing on 02-03-26 3:00PM; Conference Room 229 & Videoconference. |
| Jan 28, 2026 | Referred to TRS, WAM. |
| Jan 21, 2026 | Introduced and passed First Reading. |
| Jan 20, 2026 | Pending Introduction. |
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Date
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Description
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Location
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Votes
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|---|---|---|---|---|
| Mar 19, 2026 | The committee on TRN recommend that the measure be PASSED, WITH AMENDMENTS | House Standing Committee on Transportation |
Passed |
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| Mar 10, 2026 | Third Reading | Senate Floor |
Passed |
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| Mar 3, 2026 | The committee(s) on WAM recommend(s) that the measure be PASSED, WITH AMENDMENTS | Senate Standing Committee on Ways and Means |
Passed |
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| Feb 3, 2026 | The committee(s) on TRS recommend(s) that the measure be PASSED, WITH AMENDMENTS | Senate Standing Committee on Transportation |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
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Organization
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Position
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Date
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|---|---|---|
| Alaska Airlines | *** Support | Mar 18, 2026 |
| Chamber of Commerce Hawaii | *** Support | Mar 18, 2026 |
| Hawaiian Airlines | *** Support | Mar 18, 2026 |
| Kohala Coast Resort Association | *** Support | Mar 18, 2026 |
STAND. COM. REP. NO. 2844
Honolulu, Hawaii
RE: S.B. No. 2399
S.D. 2
Honorable Ronald D. Kouchi
President of the Senate
Thirty-Third State Legislature
Regular Session of 2026
State of Hawaii
Sir:
Your Committee on Ways and Means, to which was referred S.B. No. 2399, S.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO A GENERAL EXCISE TAX EXEMPTION FOR AIRCRAFT MAINTENANCE,"
begs leave to report as follows:
The purpose and intent of this measure is to amend the general excise tax law.
More specifically, this measure provides a general excise tax exemption for the sale of materials, parts, or tools that are used for aircraft service and maintenance or for the construction of an aircraft service and maintenance facility.
Your Committee received written comments in support of this measure from Alaska Airlines and Hawaiian Airlines, and from Chamber of Commerce Hawaii.
Your Committee received written comments on this measure from the Department of Taxation.
Your Committee finds that many states explicitly exempt aircraft parts from their sales tax if the parts are sold to a federally licensed air carrier. Your Committee also finds that Hawaii law provides a general excise tax exemption for aircraft servicing and maintenance. However, your Committee recognizes that the Hawaii Intermediate Court of Appeals recently held that the exemption language does not exempt from the general excise tax the sale of parts to an air carrier, even though the complementary use tax law explicitly exempts from the use tax imports of these parts from an out-of-state seller.
This measure addresses that gap in the exemption language.
Your Committee has amended this measure by changing the effective date to July 1, 2050, to facilitate further discussion on the measure.
As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2399, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2399, S.D. 2.
Respectfully submitted on behalf of the members of the Committee on Ways and Means,
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________________________________ DONOVAN M. DELA CRUZ, Chair |
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Date
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Testimony PDF
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|---|---|
| Mar 18, 2026 | SB2399_SD2_TESTIMONY_TRN_03-19-26_.PDF |
| Mar 3, 2026 | SB2399_SD1_TESTIMONY_WAM_03-03-26_.PDF |
| Feb 3, 2026 | SB2399_TESTIMONY_TRS_02-03-26_.PDF |
Discussed in Hearing
1MIN
House Standing Committee on Transportation
40SEC
House Standing Committee on Transportation
12MIN
Senate Standing Committee on Transportation
1MIN
Senate Standing Committee on Transportation
Bill Author
Bill Co-Author(s):