Aerospace product development

From the 2024 DOR Tax Exemption Study

82.04.290(3) - Aerospace product development Description Persons who perform aerospace product development for others receive a preferential B&O tax rate of 0.9%, as compared to the service and other activities B&O tax rate of 1.5% or 1.75%. The preferential tax rate expires July 1, 2040. Purpose To provide an incentive for persons to engage in aerospace product development, such as research, engineering, and design activities performed in developing an aerospace product. Taxpayer ($ in millions): savings FY 2024 FY 2025 FY 2026 FY 2027 State Taxes $1.700 $1.820 $1.870 $1.910 Local Taxes $0.000 $0.000 $0.000 $0.000 Repeal of Repealing this preferential B&O tax rate would increase revenues. exemption Potential ($ in millions): revenue gains FY 2024 FY 2025 FY 2026 FY 2027 from full repeal State Taxes $0.000 $1.660 $1.870 $1.910 Local Taxes $0.000 $0.000 $0.000 $0.000 Assumptions - This repeal takes effect July 1, 2024, and impacts 11 months of collections in fiscal year 2025. - Growth rate mirrors the industrial production index for aerospace products and parts growth rate reflected S&P Global Market Intelligence's March 2023 forecast. Data Sources - Department of Revenue, Annual ta