Tennessee Department of Revenue Lowers Aviation Fuel Tax Cap

May 25, 2023

The Tennessee Department of Revenue has recently issued Important Notice #23-13 regarding the aviation fuel tax cap in Tennessee.

Public Chapter 455 (2023), effective May 17, 2023, lowers the aviation fuel tax cap. This legislation lowers the cap on aviation fuel tax remittance for aviation fuel used in the operation of a commercial aircraft by a certified or licensed air carrier with a transportation hub within Tennessee. The cap was previously set at $8.5 million for the July 1, 2021, through June 30, 2022, tax year and $5 million for tax years occurring thereafter.

Pub. Ch. 455 states the cap remains at $5 million until June 30, 2023, and further lowers the cap to $3 million for the period of July 1, 2023, through June 30, 2024, and $1 million for a tax year occurring on or after July 1, 2024.

Transportation Hub Definition

Air carriers, defined as businesses providing air transportation of passengers or property, must have a transportation hub in this state to qualify for the aviation fuel tax cap. Transportation hub is defined as:

  • A location in this state from which there originates fifty (50) or more flight departures five (5) days per week for six (6) or more months during the calendar year and where passengers or property are regularly exchanged at the location between flights of the same or a different certificated or licensed air carrier.

For more information, visit the Department of Revenue website. Additional information is also available in the Department’s Sales and Use Tax Manual.