Bonus Depreciation for Business Aircraft in 2026

Aircraft bonus depreciation allows eligible U.S. taxpayers to deduct up to 100% of an aircraft’s qualifying depreciable basis in the year it enters service. Under the One Big Beautiful Bill Act, qualifying new and used business aircraft acquired and placed in service after January 19, 2025, can receive this treatment. The provision has no scheduled phaseout under current law, according to the IRS’s January 2026 guidance.

That can materially change the first-year cash flow of an aircraft purchase. However, the deduction’s value depends on the buyer’s tax position, the aircraft’s use and whether the deduction can actually be used that year.

A $20 million write-off does not produce $20 million in tax savings. At a 21% federal corporate income tax rate, a fully usable $20 million deduction would reduce regular federal income tax by $4.2 million. The purchase still needs to make commercial sense after financing, operating expenses and eventual resale are considered.

What is bonus depreciation in business aviation

Depreciation is the tax mechanism for recovering the cost of a business asset over time. Bonus depreciation accelerates that recovery, allowing a larger deduction when an eligible asset first enters service.

Under ordinary aircraft depreciation rules, a jet used primarily for a company’s own business transportation generally falls within a five-year MACRS recovery period. Aircraft used primarily for commercial or contract carriage generally fall within seven-year MACRS. The appropriate classification depends on actual use, as explained in this aircraft depreciation analysis hosted by NBAA.

MACRS stands for Modified Accelerated Cost Recovery System. A five-year classification does not necessarily mean five equal deductions. The depreciation method and timing convention determine how much is deducted each year.

With 100% bonus depreciation, the qualifying basis can instead be recovered in the first year. Once that basis has been fully deducted, it cannot be deducted again in later years. Tax depreciation also differs from market depreciation: a jet with a zero tax basis can still have substantial resale value.

What changed under the One Big Beautiful Bill Act

The 2025 legislation restored 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025. It replaced the previous declining-percentage framework for that property. The IRS subsequently issued Notice 2026-11 explaining how the amended rules operate.

For a qualifying 2026 acquisition, the starting point is therefore 100%, rather than the 20% general rate that had been scheduled under the earlier phaseout. “Permanent” means there is no scheduled expiration in the current provision; future legislation could still change it.

Older purchase agreements need a separate review

The acquisition date is a tax-law determination, not necessarily the day the buyer wires the final payment. Binding contracts, construction arrangements and accounting methods can affect the analysis.

NBAA’s January 2026 explanation notes that some aircraft delivered after January 19, 2025, may qualify even when an earlier purchase agreement exists. Buyers should have those facts reviewed rather than assuming that either the contract date or delivery date settles eligibility.

How much tax can a business aircraft deduction save

The useful starting calculation is:

Usable deduction × applicable marginal tax rate = potential current-year income tax reduction.

Consider a U.S. C corporation with $25 million of taxable income before aircraft depreciation. It purchases a jet with a $20 million depreciable basis, uses it entirely for qualifying business activity and can use the entire deduction immediately.

The example assumes the 21% regular federal corporate income tax rate, no state tax, no credits, no corporate alternative minimum tax and no other relevant adjustments. The ordinary-depreciation comparison assumes five-year MACRS, 200% declining balance and the half-year convention, with no Section 179 deduction or bonus depreciation.

Illustrative calculations by BizJet Journal. MACRS conventions and calculation rules are described in IRS Publication 946. The $4 million comparison is not universal; a late-year purchase may trigger the mid-quarter convention.

The distinction between $4.2 million and $3.36 million matters. The former is the tax reduction against a scenario with no aircraft deduction. The latter is the additional first-year benefit compared with the ordinary depreciation assumed here.

Subtracting the $4.2 million tax reduction from the $20 million purchase price gives $15.8 million. That is an illustrative purchase price net of the initial federal benefit, not the aircraft’s lifetime ownership cost. It excludes operating expenses, financing, transaction taxes, sale proceeds and tax on disposition.

Bonus depreciation primarily brings deductions forward. That timing can be valuable: cash retained today can reduce borrowing or remain available to the business. However, a sound acquisition model should compare after-tax cash flows across the entire holding period.

Which aircraft qualify for bonus depreciation

New and pre-owned aircraft

Both new and qualifying used aircraft can be eligible. For a used purchase, the acquisition rules include restrictions involving previous use by the taxpayer or a predecessor, related-party transactions and certain carryover-basis or inherited-property arrangements. The IRS’s bonus depreciation FAQ explains these used-property requirements; its older effective-date discussion should be read alongside Notice 2026-11.

Buying a previously owned jet from an independent seller can therefore be very different from transferring an aircraft between related entities. “Pre-owned qualifies” is a useful starting point, but it is not a complete eligibility opinion.

More than 50% qualified business use

For aircraft subject to the listed-property rules, Section 280F generally requires qualified business use to exceed 50%. Exactly 50% does not pass. Certain commercial transportation and leasing arrangements have exceptions requiring separate analysis.

Passing the eligibility threshold does not automatically make every dollar deductible. Qualified-business-use testing and the calculation of deductible aircraft expenses are related but distinct exercises.

For example, suppose a $10 million aircraft has an established 80% deductible business allocation, passes the applicable eligibility tests and has no further disallowances. Its qualifying business basis would be $8 million. At 21%, a fully usable deduction of that amount produces an illustrative $1.68 million federal tax reduction. The 80% allocation is an assumption for this example, not a universal formula for mixed-use corporate aircraft.

The aircraft-specific 25% test

Section 280F also contains special rules for related-party leasing and compensatory use. Certain otherwise excluded uses can count toward qualified business use if at least 25% of total aircraft use consists of qualified business use outside those excluded categories. This does not replace the more-than-50% test.

Owners with multiple companies, shareholder travel or executive compensation flights need those arrangements assessed individually. A flight’s passenger, purpose and relationship to the taxpayer all matter.

International operations

International flying is not automatically disqualifying. Section 168 generally requires the alternative depreciation system for property used predominantly outside the United States, but includes an exception for certain FAA-registered aircraft operated to and from the United States or under U.S. government contract. Property required to use that alternative system is generally ineligible for bonus depreciation.

Registration and route patterns therefore deserve attention. A buyer should not treat U.S. registration alone as proof of qualification or assume that the same U.S. deduction applies to a foreign owner without a relevant U.S. tax position.

What placed in service means for an aircraft

The IRS describes property as placed in service when it is ready and available for its specific use. Signing a contract, paying a deposit or completing a title transfer does not by itself establish that an aircraft is ready for its intended business function.

Aircraft buyers should assess delivery, operational readiness, required modifications and any approvals needed for the intended operation. A genuine business flight may support the evidence, but there is no universal “one flight and you qualify” shortcut.

A useful caution comes from a Tax Court case summarized by NBAA. An aircraft delivered in December 2003 was held not to enter service until 2004 because modifications necessary for the taxpayer’s stated business function remained incomplete. The aircraft could fly, but that did not settle the tax question.

For a calendar-year taxpayer seeking a 2026 deduction, the relevant service deadline is generally December 31, 2026. A fiscal-year taxpayer works to its own tax-year boundary. An aircraft that enters service in January ordinarily belongs in that later tax year, even if the purchase negotiations finished in December.

Personal flights can reduce the deduction

A jet can serve both business and personal travel needs, but its tax treatment must reflect the actual use. For specified individuals, including certain officers and owners, the aircraft entertainment-expense regulations can disallow costs beyond amounts treated as compensation or reimbursed. Relevant costs can include depreciation.

Reporting a personal flight as a taxable fringe benefit therefore does not necessarily preserve the company’s full deduction. Nor does conducting a brief business activity automatically establish the tax treatment of every passenger’s travel.

Detailed records are essential. A practical flight record should identify each flight leg, its date, route, passengers, flight time and each passenger’s business purpose, supported by meeting records or other contemporaneous evidence. Keep acquisition documents, maintenance records, usage policies and personal-use calculations as well. These practices align with KPMG’s analysis of business-aircraft audit documentation.

Can a financed aircraft receive bonus depreciation

Financing does not automatically limit depreciation to the cash down payment. IRS Publication 551 explains that an asset’s cost basis can include amounts paid in cash, debt obligations, other property or services.

Consider a $20 million acquisition funded with $5 million of cash and a $15 million loan. If the buyer is the tax owner, the debt is properly included in basis and all other requirements are met, the starting purchase basis may be $20 million rather than $5 million. Business-use adjustments and deduction limitations still apply.

That can create a substantial early tax benefit relative to the buyer’s equity contribution. The $15 million loan nevertheless remains payable. Any ownership forecast should show debt service independently of tax savings and should test whether the business can carry the aircraft if those savings arrive later than expected.

Why an eligible deduction may not deliver immediate savings

Aircraft eligibility is only one part of the calculation. The taxpayer must also be able to use the resulting deduction.

IRS Publication 925 explains how basis, at-risk and passive-activity limitations can restrict losses. These rules are especially relevant when an aircraft is held through a pass-through entity or placed in a leasing activity.

A business owner should not assume that buying a jet through a separate LLC and offering it for charter will automatically offset salary, investment gains or income from another company. Entity structure, participation, financing and the character of the income can affect the outcome.

The acquisition model should distinguish the deduction generated from the deduction usable in the current year. They may be different numbers. A large deduction that cannot be used immediately does not create the same near-term cash benefit as the example above.

Bonus depreciation versus Section 179

Section 179 is another expensing provision, but its limits make it materially different from bonus depreciation for high-value aircraft purchases.

Sources: IRS Publication 946, 2026 limits; Section 179; Section 168. Section 179 figures apply to tax years beginning in 2026.

With a $2.56 million maximum deduction and phaseout beginning at $4.09 million, the general Section 179 allowance reaches zero at $6.65 million of qualifying property placed in service. A fully qualifying $20 million aircraft purchase would therefore exceed that threshold by itself.

Bonus depreciation does not have this same investment ceiling. That is why it features prominently in large-aircraft acquisition planning. The provisions cannot be used to deduct the same basis twice.

What happens when the aircraft is sold

The exit deserves as much attention as the purchase. Under the Section 1245 recapture rules explained in IRS Publication 544, gain on the sale of depreciable personal property is generally ordinary income to the extent of prior depreciation.

Suppose the $20 million aircraft was fully deducted, leaving a zero adjusted tax basis, and is later sold for $14 million. Ignoring selling costs and subsequent basis adjustments, the taxable gain is $14 million. In this simplified case, all of that gain falls within prior depreciation and is generally recaptured as ordinary income.

The aircraft has lost $6 million of market value, yet the sale still creates a tax liability because its tax basis is zero. A buyer evaluating only the first-year write-off would miss this consequence.

A separate recapture issue can arise before a sale: for aircraft subject to Section 280F, a later drop in qualified business use to 50% or less can trigger recapture of excess depreciation and a change in depreciation treatment. Continued use must therefore be monitored.

State taxes can produce a different result

Federal treatment does not automatically carry through to state income taxes. For example, California’s corporate depreciation instructions identify Section 168(k) among federal provisions to which California does not conform.

Buyers should model the applicable state rules separately. Adding a state rate to the 21% federal rate and applying the combined percentage to the full bonus deduction can overstate the benefit. Aircraft sales and use taxes are also separate from the federal income-tax deduction.

What the delivery data say about year-end aircraft buying

GAMA’s annual shipment data show that business jet deliveries increased from 764 in 2024 to 854 in 2025, a rise of 11.8%.

The 2025 year-end report breaks those deliveries down by quarter:

Source: GAMA. Quarterly shares calculated by BizJet Journal; rounding means displayed quarterly percentages do not total exactly 100%.

Q4 accounted for more than one-third of deliveries and was 50% above Q3. These are worldwide manufacturer shipments, not a count of U.S. tax-motivated purchases or pre-owned transactions. The figures show delivery concentration but do not isolate the effect of bonus depreciation.

For 2026 buyers, the practical distinction is between a tax-year deadline and an expiring incentive. Missing a December service date may move the deduction into a later year. Under current law, it does not by itself mean that the 100% rate disappears.

How to evaluate a purchase before year-end

Start with the mission: destinations, passenger needs, annual utilization and the value of reliable access. Then compare ownership with charter or fractional alternatives. BizJet Journal’s private jet cost and ownership guide provides context for the broader financial commitment.

Before committing, work through these questions with an aviation tax adviser and acquisition team:

1. Does the aircraft fit the business? Establish the operational requirement and a credible annual budget.
2. Who will own it for tax purposes? Review the entity structure, financing and any leases between related companies.
3. What use is expected? Model business, personal and charter activity, including how each will be documented.
4. Can it genuinely enter service on time? Allow for inspections, repairs, modifications, crew preparation and required approvals.
5. How much of the deduction is usable now? Calculate the federal benefit, state differences and applicable loss limitations.
6. What happens over the holding period? Include debt service, maintenance, resale assumptions and potential recapture.

A good aircraft acquisition should remain defensible when the tax benefit is modeled conservatively. Bonus depreciation can improve the timing of cash flows, but it cannot make an unsuitable aircraft, excessive purchase price or unaffordable operating budget into a sound business decision.

Frequently asked questions

Is 100% aircraft bonus depreciation available in 2026

Yes. Qualifying aircraft acquired and placed in service after January 19, 2025, can receive 100% bonus depreciation. The current provision has no scheduled phaseout, but eligibility and deduction limitations still apply.

Can I deduct the full purchase price of a private jet

Potentially, if the entire depreciable basis qualifies and the deduction is allowable. Personal use, entertainment disallowances and other limitations can reduce the amount. Owning a jet through a business does not automatically qualify its full cost.

Does a used business jet qualify

A qualifying used acquisition can be eligible. Prior-use, related-party and basis restrictions must be checked; the aircraft does not have to be factory-new.

Is one business flight enough to claim the deduction

One flight is not an automatic qualification rule. Operational readiness for the intended function, the service date, business-use requirements and supporting records all matter.

Do fractional aircraft interests qualify

They can. NBAA confirms that the bonus-depreciation framework applies to both whole and fractional aircraft purchases. Eligibility concerns the buyer’s qualifying ownership interest, not the value of the entire aircraft.

Can an owner choose not to take bonus depreciation

Yes. An election out generally applies to the relevant class of property placed in service during that tax year, rather than being an unrestricted aircraft-by-aircraft choice. The IRS explains the election and filing requirements.

Does bonus depreciation make a jet profitable

No. It changes tax timing and potentially cash flow. Profitability still depends on the aircraft’s revenue or business value relative to ownership and operating costs.

This article provides general educational information about U.S. federal tax treatment as researched on October 9, 2026. Aircraft transactions require advice tailored to the owner, operating structure and actual use.