Washington Repeals Private Aircraft Luxury Tax, Updates Aviation Fees

This article is based on an official press release from the National Business Aviation Association (NBAA) and supplementary industry research.

On March 31, 2026, Washington Governor Bob Ferguson signed House Bill 2711 (HB 2711) into law, effectively repealing a controversial 10% “luxury tax” on private aircraft. The repeal arrived just one day before the tax was scheduled to take effect on April 1, 2026. According to an official press release from the National Business Aviation Association (NBAA), the organization welcomed the repeal, which was the culmination of a grassroots campaign by a coalition of local aviation stakeholders.

The original tax had sparked significant concern within the general aviation community, prompting warnings that it would drive business out of the state. In place of the luxury tax, HB 2711 introduces a compromise funding mechanism that includes moderate increases to aviation fuel taxes, aircraft registration, and excise fees to continue funding the state’s environmental and aeronautics initiatives.

The Original Tax and Industry Backlash

The original tax was enacted during the 2025 legislative session under Engrossed Substitute Senate Bill 5801 (ESSB 5801). It imposed a 10% sales and use tax on non-commercial (private and general aviation) aircraft valued at over $500,000. The tax applied strictly to the portion of the aircraft’s value that exceeded the $500,000 threshold. Furthermore, it applied not only to new purchases but also to existing aircraft brought into, hangared, or leased in Washington state by residents. The revenue generated from this tax was earmarked for the state’s Sustainable Aviation Fuel (SAF) account.

Capital Flight and Economic Concerns

The aviation industry, led by the NBAA, the Aircraft Owners and Pilots Association (AOPA), and local lawmakers, launched a campaign to repeal the tax, warning of severe unintended economic consequences. Industry research indicates that before the tax even took effect, businesses began relocating assets to avoid the financial burden.

Notably, Schweitzer Engineering Laboratories (SEL), a major employer based in Pullman, Washington, relocated its fleet of five corporate aircraft to Lewiston, Idaho. General aviation is a significant economic driver in Washington; according to a 2020 Washington Aviation Economic Impact Study cited in industry reports, the aviation sector supports over 407,000 jobs, a payroll exceeding $26.8 billion, and generates more than $107 billion in annual business revenue.

The HB 2711 Compromise: A New Funding Structure

To replace the lost revenue intended for the Sustainable Aviation Fuel account, lawmakers and aviation stakeholders negotiated a new funding structure under HB 2711. State Representative Tom Dent (R-Moses Lake) initially introduced legislation to repeal the tax, and its core provisions were successfully rolled into the broader transportation bill.

Fuel Taxes, Fees, and Drone Assessments

According to legislative summaries, the new law implements several broad-based changes to aviation fees and taxes:

• Fuel Tax Increase: The state’s aircraft fuel tax will increase by 7 cents per gallon (from 18 cents to 25 cents), effective November 1, 2026.
• Registration & Excise Fees: Beginning January 1, 2027, the base registration fee for aircraft will double from $15 to $30. The aircraft excise tax range will also increase from the current $20–$4,000 range to a new range of $120–$8,000. Both assessments will automatically increase by 2% annually starting in 2028.
• Commercial Drones: For the first time, commercial drones will be subject to an annual excise tax of $120, starting in 2027.

To ensure environmental initiatives remain supported, 28% of the aviation fuel tax revenue and a similar portion of registration fees will be directed to a new SAF airport infrastructure account. The remainder will go to the state’s general aeronautics account.

Stakeholder Reactions

The repeal was met with relief from industry leaders and local businesses who had actively lobbied against the original tax.

“The success in halting the original aircraft tax is a win for job creation, local investment and economic opportunity. The measure signed today represents the views of a wide range of stakeholders and, importantly, ensures our seat at the table as an active, contributing neighbor in the state of Washington.”
, Phil Derner, NBAA Regional Director

“The original tax would have punished the ownership and use of a valuable asset. Many aircraft owners, operators, airports and businesses met with legislators to explain the impact, and we are relieved that legislators fully considered the impact of the tax and repealed it.”
, Dr. Ed Schweitzer, Founder of Schweitzer Engineering Laboratories (SEL)

“Purchases are being delayed, redirected or moved out of state. Once that business leaves Washington, it’s extremely difficult to bring it back… Washington’s aviation industry is a cornerstone of the state’s economy, and I am working hard to ensure that it stays that way.”
, Rep. Tom Dent (R-Moses Lake)

AirPro News analysis

We view this legislative pivot as a textbook example of the economic border wars that frequently occur when hyper-localized luxury taxes are applied to highly mobile industries. Aviation assets are inherently easy to relocate, as demonstrated by the immediate capital flight of corporate aircraft to neighboring Idaho before the tax even took effect.

The resulting compromise in HB 2711 represents a pragmatic “pay-to-play” restructuring. Rather than evading state taxes entirely, the aviation industry agreed to broad-based fee and fuel tax increases to ensure Washington’s environmental and aeronautics goals remain funded. This unified front of local businesses, national associations, and bipartisan lawmakers successfully reversed a major tax policy by offering a sustainable, industry-supported alternative that protects the state’s broader economic interests.

Frequently Asked Questions (FAQ)

When does the new aviation fuel tax increase take effect?
The 7-cent per gallon increase (raising the tax from 18 cents to 25 cents) takes effect on November 1, 2026.

Are commercial drones affected by the new legislation?
Yes. Starting in 2027, commercial drones will be subject to an annual excise tax of $120.

What happens to the Sustainable Aviation Fuel (SAF) funding?
Under the compromise, 28% of the aviation fuel tax revenue and a similar portion of registration fees will be directed to a new SAF airport infrastructure account to support clean aviation fuels.

Sources: National Business Aviation Association (NBAA)