The July/August Issue of Business Jet Traveler Magazine (subscription required) dedicates several pages to tax planning for operators of business aircraft. In the article Taxing Situations reporter Jeff Wieand spends some time focusing on how state taxes work, and how to navigate around them if possible. Some highlights include:

If you close the sale and take possession of the plane in Connecticut, Delaware, Massachusetts, Montana, New Hampshire, Oregon or Rhode Island, you can avoid sales tax. BUT, if a key component is not installed at time of purchase (like an engine) that component could be taxed later.

If the aircraft is undergoing maintenance in a state with a sales tax and can’t be flown to a non-tax state at closing, you may be able to take advantage of a “fly-away” rule that exempts the transaction from sales tax.

If you buy a plane in a no-tax state, but keep it and use it primarily in a sales tax state, you’ll need to contend with a “use tax.” This tax will likely cost you as much as sales tax would.

One workaround is to structure things so you can take advantage of a commercial exemption. Operating an aircraft
under the FAA charter rules (Part 135) can help avoid use taxes.

Leasing is another approach:

A “casual sale” exemption, may also apply. If you can’t avoid use tax altogether, you may be able to significantly reduce it by means of a lease. That’s because, in many states, use tax on
the purchase of an aircraft for lease to another entity is levied on periodic lease payments as opposed to the purchase price.

All in all, it’s hard to escape state taxes:

The states have a tool chest full of other taxes that they can impose on business jets, including registration fees, property taxes and forms of income tax. A state might impose an annual tax on the value of corporate assets in the state, including any aircraft owned. Moreover, a state’s treatment of income tax (deductions, for example), may vary from the treatment imposed by the IRS.