Proposals to Limit Airline Tax Breaks, Loopholes Gaining Traction in Growing Number of State Legislatures

Last week, legislators in hub airport states of Illinois, Georgia and North Carolina all advanced proposals to end valuable handouts, loopholes and tax breaks worth over $93 million per year to United, Delta and American Airlines.

  • On Wednesday, March 18, a majority of the North Carolina Senate signed onto an economic incentive bill that would let American Airlines’ handout expire at the end of the year. The break is a cap on the amount of sales tax on jet fuel American pays, expected to be worth $15.5 million next year.

  • On Thursday, March 19, the Illinois House Revenue and Finance Committee voted in favor of a bill toclose a tax loophole that United Airlines and American Airlines use to avoid paying millions in local sales taxes.

  • On Friday, March 20, the Georgia Senate passed a transportation funding package that would end Delta Air Lines’ tax break. The bill, which passed the House earlier in March, would eliminate thestate’s estimated $25 million sales tax break on jet fuel for airlines.

In 2013, airlines received an estimated total of over $1 billion in tax breaks from state and local governments on their jet fuel purchases.

A new report by 12billion.org summarizes where some of those valuable tax loopholes, exemptions, rebates, and caps have recently come under critical public and legislative review. States include Illinois, Georgia, North Carolina, Florida, Michigan, Washington and Oregon.

As state and local governments continue to struggle with challenging budgets, the North American airline industry overall anticipates record profit of $13.2 billion in 2015.