Aircraft Sales and Use Tax

What is it?

A tax on the:

  • Sale of any aircraft sold in Virginia; or
  • Any aircraft purchased elsewhere, but licensed in Virginia; or
  • The use of any aircraft in Virginia.

For the purposes of the tax, an aircraft is any device that can fly more than 24 inches above the ground when operated by 1 or more people. This includes inoperable aircraft, as well as aircraft kits. Parachutes, hang gliders, and the like are not considered aircraft.

Tax rate:

  • 2% of the purchase price of the aircraft; or
  • If you purchased the aircraft outside of Virginia, and are licensing it 6 months or more after moving it here, 2% of the purchase price or current market value, whichever is lower; or
  • 2% of the gross receipts from the lease, charter or other use of the aircraft.

If you move your aircraft outside of Virginia within 90 days of purchasing it, you do not owe aircraft sales and use tax.

For a current list of exemptions to aircraft sales and use tax, please see Va. Code § 58.1-1505.

Who owes this tax?

People and businesses who purchase aircraft in Virginia owe the tax. Also, anyone who stores their aircraft in Virginia for more than 90 days in a calendar year owes the tax.

Commercial aircraft dealers, licensed by the Department of Aviation (DOAV), can choose to be taxed on the gross receipts from leasing, chartering or other uses of their aircraft, rather than pay the tax on each individual plane they purchase. To make this election, you must notify Virginia Tax in writing before registering for the tax.

How to register:

Individual Purchasers

Individuals who purchase an aircraft are not required to register for aircraft sales and use tax with Virginia Tax. See How to file and pay, below, for information about filing your aircraft sales and use tax return.

Commercial Dealers

Commercial aircraft dealers who choose to be taxed on gross receipts from leasing, chartering and other uses are required to register with Virginia Tax.

Commercial dealers who do not make this election should follow the same procedure as individual purchasers to file and pay the tax on each aircraft they buy.

How to file and pay

Individual Purchasers

File Form AST-3, Aircraft Sales and Use Tax Return, before licensing your aircraft with DOAV. We will let DOAV know that you’ve paid the tax, so they can issue your license.

Please visit the DOAV website for information about licensing your aircraft.   

Dealer Returns

File Form AST-2, Dealer's Aircraft Sales and Use Tax Return, monthly. Returns and payments are due on or before the 20th day of the month following the month in which the transactions occurred. 

For more information refer to Va. Code §§ 58.1-1500 through 1510.

Watercraft Sales and Use Tax

What is it?

A tax on:

  • The sale of any watercraft sold in Virginia; or
  • Any watercraft not sold in Virginia that has to be titled with the Virginia Department of Game and Inland Fisheries (DGIF) for use in Virginia; or
  • Any motor used to power a watercraft, if not purchased with the watercraft; or
  • The lease, charter or other compensatory use of a watercraft in Virginia.

Tax rate:

  • 2% of the purchase price of the watercraft; or
  • 2% of the current market value of the watercraft, if it was purchased 6 months or more before it was required to be titled for use in Virginia; or
  • 2% of the gross receipts from leasing, chartering or other compensatory use.

The maximum watercraft tax for any transaction is $2,000. 

What is a "watercraft?"
  • Any vessel propelled by machinery whether or not the machinery is the principal source of propulsion; or 
  • Any sail-powered boat over 18 feet long measured along the centerline. 

Not included in the definition of “watercraft” (for the purpose of this tax):

  • Seaplanes
  • Any vessel with a valid marine titling document issued by the United States Coast Guard. 
Who owes this tax?

Individuals who purchase watercraft are responsible for the watercraft sales and use tax.  

Watercraft dealers are exempt from this tax on vessels purchased for resale (unless you elect to collect it on behalf of your customers,) or on vessels purchased for charter, lease or other compensatory use. Instead, dealers are responsible for the tax on the gross receipts from operating these vessels for charter, etc.

What about the "regular" sales tax?

All transactions subject to the watercraft sales and use tax are exempt from the retail sales and use tax. Seaplanes are subject to the aircraft sales and use tax.

For an updated list of exemptions to the watercraft tax, please refer to Va. Code § 58.1-1404.

How to register

Individual Purchasers

Individuals who purchase a watercraft are not required to register for watercraft sales and use tax with Virginia Tax. See "How to file and pay," below, for information about filing your watercraft sales and use tax return.

Please visit the DGIF website for information about registering your watercraft.   

Watercraft Dealers

Dealers are required to register with Virginia Tax.  

How to file and pay

Individual Purchasers

File the Form WCT-3A, Individual Watercraft Tax Worksheet before titling your watercraft with DGIF.  You are required to be title your watercraft before you can operate it in Virginia. Pay the tax to either Virginia Tax or DGIF. If you purchase the watercraft from a dealer authorized by agreement to collect the tax, it may be paid to the dealer. 

Dealer Returns

File Form WCT-2, Dealer's Monthly Return of Watercraft Sales and Use Tax monthly. Returns and payments are due on or before the 20th day of the month following the month in which the transactions occurred. The return will show gross receipts from compensatory use of watercraft. The return may also include gross receipts from sales if authorized by agreement with Virginia Tax to collect watercraft tax on behalf of your customers.

For additional information please refer to Va. Code §§58.1-1400 through 58.1-1410.