According to the Legislative Budget Board, the bill would result in an estimated loss of $16.8 million to General Revenue-related funds over the 2026–2027 biennium. Specifically, the revenue loss is estimated at $7.87 million in FY2026 and $8.93 million in FY2027. These losses are expected to grow incrementally each fiscal year, reaching $10.05 million by FY2030.

The fiscal analysis indicates that the revenue loss stems from the bill’s elimination of ownership restrictions currently required to qualify for the tax exemption. Under existing law, the exemption only applies to aircraft owned or operated by licensed commercial carriers or certified flight schools. SB 1030 would extend this exemption to all aircraft, regardless of the owner, thereby broadening eligibility and reducing taxable sales volume for parts and materials used in aircraft maintenance and operation.

Beyond the state budget, the bill would also reduce revenues for local jurisdictions. Cities are projected to lose approximately $1.44 million in FY2026 and $1.84 million by FY2030. Transit authorities, counties, and special districts would also experience proportionate annual losses, culminating in a multi-tiered decrease in public revenue across all levels of government.

The fiscal methodology relies on historical sales tax data from aircraft maintenance, repair, and overhaul (MRO) service providers. These data, collected by the Comptroller of Public Accounts, help estimate the extent of sales activity that would shift from taxable to tax-exempt under the new law. While this expansion supports aviation industry competitiveness, policymakers must weigh its cost against the anticipated reduction in public revenue.

SB 1030 takes a targeted step toward improving Texas’s competitiveness in the aviation maintenance industry by expanding the sales and use tax exemption for aircraft components. By removing existing restrictions based on the ownership or operational status of the aircraft, the bill allows all tangible personal property that becomes a component of, or is necessary for, normal aircraft operations to qualify for the exemption. This modernization of the tax code helps level the playing field for Texas-based maintenance, repair, and overhaul (MRO) businesses, which are currently at a disadvantage compared to those in neighboring states such as Oklahoma and Kansas.

An economic study cited in the bill analysis estimates that removing the current MRO tax limitations could lead to significant economic gains—over 9,700 new jobs, $1.4 billion in direct spending, and $57 million in new tax revenue. These benefits support key liberty principles, such as free enterprise, limited government, and individual liberty, by reducing tax burdens and fostering private-sector growth.

However, it is important to acknowledge a broader fiscal concern. While this exemption may yield long-term economic benefits, expanding the list of tax exemptions without accompanying reductions in government spending can shift the tax burden onto those who do not qualify for such relief. Over time, this can narrow the tax base and create inequities in the overall system. Maintaining a broad, low-rate tax structure and exercising discipline in state spending are essential to ensuring that tax relief remains sustainable and equitable for all Texans.

Despite that concern, SB 1030 represents a sound and strategic policy response to a documented economic disadvantage, and its passage is likely to strengthen a high-value sector of the state economy. For these reasons, Texas Policy Research recommends that lawmakers vote YES on SB 1030.

• Individual Liberty: The bill empowers individuals and businesses in the aviation industry by reducing government interference in their economic choices. By removing restrictive conditions on who qualifies for the tax exemption, it respects the freedom of aircraft owners and operators to maintain their property without facing a discriminatory tax burden. This aligns with the principle that individuals should be free to engage in lawful enterprise without arbitrary constraints.
• Personal Responsibility: Encouraging broader access to tax exemptions for necessary aircraft components places responsibility on aircraft owners and operators to invest in proper maintenance. By lowering the cost of compliance and upkeep, the bill fosters responsible stewardship of aircraft, which has safety and economic implications. Individuals are better able to meet these obligations when tax policy does not impose excessive burdens.
• Free Enterprise: The bill directly advances free enterprise by addressing a competitive disadvantage facing Texas businesses. Maintenance, repair, and overhaul (MRO) firms lose business to neighboring states that do not tax aircraft parts. By removing this structural barrier, the bill enhances market competition, encourages private investment, and supports entrepreneurship within Texas’s aviation sector.
• Private Property Rights: Tax exemptions for property that is affixed to an aircraft reinforce the principle that individuals should not be unduly burdened by the state for maintaining or improving their property. The bill reduces a financial disincentive to invest in aircraft—an important form of private capital—thus protecting the economic value and utility of privately held assets.
• Limited Government: While the bill limits government reach by narrowing the scope of sales taxation, it also expands the list of exemptions within the tax code. Without broader spending restraint or offsetting reforms, each new exemption reduces state revenue and can prompt greater reliance on other forms of taxation. While the bill reduces the footprint of government in one area, the cumulative effect of exemptions may complicate efforts to constrain government spending in the long term.