08/01/2025
We want to inform you of a significant tax law change that may present valuable planning opportunities for your aircraft acquisition strategy in 2025 and beyond.
As part of recently passed legislation, “One Big Beautiful Bill,” Congress has reinstated 100% bonus depreciation for qualified property, including new and pre-owned business aircraft. This change is retroactive to January 20, 2025, and allows taxpayers to fully expense 100% of the purchase price of a qualified business aircraft in the first year it is placed in service.
Key Highlights:
• Applies to new and used aircraft that meet IRS business-use requirements.
• Aircraft must be “placed in service” (i.e., ready and available for business use) within the same tax year the deduction is claimed.
• For aircraft under purchase agreement prior to January 20, 2025, a detailed review will be necessary to determine eligibility. If your aircraft purchase agreement (APA) was signed prior to 1/20/2025, please reach out to ATC to discuss your options.
• Section 179 expensing has also been increased to $2.5 million for 2025 and applies to aircraft costing up to $6.5 million. Section 179 is a helpful alternative when 100% bonus depreciation may not be optimal.
Considerations for Aircraft Buyers:
Clients planning to acquire an aircraft in 2025 should carefully consider the following:
• Business use documentation and substantiation remain critical to qualify for these benefits.
• Personal use, hobby loss rules, and passive activity loss limitations must be properly managed.
• Related party leasing arrangements and listed property rules need to be addressed to ensure compliance.
• Sales and use tax exposure varies by state and should be reviewed in conjunction with your acquisition.
Current Aircraft Owners:
2025 presents an ideal opportunity to upgrade. With 100% bonus depreciation available, you may be able to offset taxable income triggered by depreciation recapture on the sale of your existing aircraft, while also securing additional deductions on your new purchase to further reduce your business income.
As always, the intersection of federal income tax law, state tax rules, and FAA regulations makes aircraft ownership a uniquely complex (but highly rewarding) opportunity for proactive tax planning. Our team at Magna Air Group and Strategic Air Services is here to guide you through these changes and help you maximize the tax benefits of your aircraft acquisition and ownership.
Contact Kevin at [email protected]
