At a glance
- What it is
- Depreciating a business aircraft, new or used, with 100% bonus depreciation under IRC §168(k), based on its business use.
- What it saves
- Federal income tax in the year the aircraft is placed in service, through a large depreciation deduction.
- Best fit
- Owners with high income who fly often for business and would use the aircraft mostly for business.
- Main catch
- Business use must be over 50%, and personal and entertainment flights have their own costly rules.
- Later
- When you sell the aircraft, the depreciation is generally recaptured as ordinary income.
Key takeaways
- With 100% bonus depreciation made permanent in 2025, the business-use share of a qualifying aircraft can be deducted in the year it's placed in service.
- It fits high-income owners who fly often for business, such as construction, energy, agriculture, and multi-site companies.
- In the illustrative example, a $3,000,000 aircraft with 80% business use saves about $888,000 of the owner's federal tax in year one.
- The catch: business use must be over 50%, personal and entertainment flights have costly rules, and depreciation is generally recaptured as ordinary income on sale.
The numbers
Picture an S corporation that buys a $3,000,000 aircraft and places it in service this year. Flight logs show 80% qualified business use. The owner is in the 37% bracket and the business has enough income to absorb the deduction.
For illustration purposes. Tax law may change, which may change these calculations slightly.
Personal tax for the owner in year one (federal)
| Amount | |
|---|---|
| Aircraft cost | $3,000,000 |
| Business-use share (80%) | $2,400,000 |
| Bonus depreciation (100% of the business share) | $2,400,000 |
| Federal tax saved at 37% | $888,000 |
The deduction passes through to the owner and saves about $888,000 of federal tax in year one. Operating costs for business flights, like fuel, crew, hangar, insurance, and maintenance, are also deductible. Oklahoma tax is figured separately.
It’s a timing benefit as much as a savings. When the aircraft is sold, the depreciation taken is generally taxed as ordinary income. If business use drops to 50% or less in a later year, part of the deduction is recaptured.
Could this strategy work for your business?
In a free tax analysis, your tax strategist checks whether it fits and what it could save, using your real numbers.
How it works
- Confirm the business need. How often you fly, where, and for what business purpose. The aircraft should make business sense before tax.
- Choose the ownership structure. Often the operating company or a separate entity that leases to it. The structure affects business use, liability, and FAA rules.
- Buy and place it in service. New and used aircraft can both qualify, if the aircraft is new to you and acquired after January 19, 2025.
- Keep a log of every flight. Date, passengers, destination, and business purpose for each passenger, usually tracked by flight hours.
- Handle personal flights correctly. Personal flights by owners and executives are either reported as taxable fringe benefits at IRS rates or reduce the deductible costs. Entertainment flights generally aren’t deductible.
Who it fits
- Owners whose businesses span many locations, such as construction, energy, agriculture, and multi-site companies.
- Businesses with strong taxable income in the year of purchase.
- Owners who already charter often and could save by owning.
When it doesn’t fit
- Aircraft used mostly for personal or vacation travel.
- Businesses without enough income to use the deduction, since losses may be limited or carried forward.
The rules
- More than 50% business use. Aircraft are “listed property.” If qualified business use is 50% or less, bonus depreciation isn’t allowed and slower straight-line depreciation applies.
- Owner use and leases. Use by 5% owners and related parties, and leases to them, have special rules that can keep flights from counting as qualified business use.
- Entertainment and personal flights. Costs of entertainment flights are generally disallowed, and personal flights by owners and officers can reduce deductions even when they’re reported as income.
- Passive activity rules. An aircraft leased to a charter operator, or owned in a separate leasing entity, may be a passive activity.
- FAA rules. How the aircraft is operated and billed must also follow FAA regulations, which are separate from tax rules.
Risks and costs to weigh
- Audit attention. Business aircraft are a known IRS focus area. Records made at the time of each flight are essential.
- Recapture. Selling, or falling to 50% or less business use, brings depreciation back into income.
- Cost of ownership. Crew, maintenance, insurance, and hangar costs are large. The deduction never makes an unneeded aircraft worth buying.
- A team effort. Aviation counsel, your aircraft manager, and your tax strategist should plan the structure together.
How we handle it for clients
With a Cannon & Brown tax plan, we model the purchase before you buy: the year-one deduction, the effect of personal and entertainment flights, the excess business loss limit, and recapture on a future sale. We set up the flight log and business-use tracking, and keep the aircraft’s costs properly recorded in your books all year. Because our technology keeps your numbers current, we can show you the impact of timing the purchase this year or next. Your tax strategist reviews every recommendation.
Illustrative example. The business and figures on this page are hypothetical, used to explain how the strategy works. They are not a client and not a promise of results. The example assumes a $3 million aircraft acquired after January 19, 2025 and placed in service this year, 80% qualified business use, 100% bonus depreciation on the business share, enough business income to use the deduction, and the 37% federal rate. This page is educational and is not tax or legal advice for your situation; tax rules and limits change.
Common questions about business aircraft
Can I write off a used airplane with bonus depreciation?
Yes. New and used aircraft can both qualify, if the aircraft is new to you and acquired after January 19, 2025, and qualified business use is over 50%.
What happens if I use my business plane for personal trips?
Personal flights by owners and executives are either reported as taxable fringe benefits at IRS rates or reduce the deductible costs, and entertainment flights generally aren't deductible. If business use drops to 50% or less, bonus depreciation isn't allowed and part of a past deduction can be recaptured.
What records do I need to deduct a business aircraft?
A log of every flight made at the time, with the date, passengers, destination, and business purpose for each passenger, usually tracked by flight hours. Business aircraft are a known IRS focus area, so these records are essential.
Is buying a plane for the tax deduction worth it?
Only if the aircraft makes business sense before tax. Crew, maintenance, insurance, and hangar costs are large, and the deduction is partly a timing benefit because depreciation is generally taxed as ordinary income when you sell.
Brooks leads Cannon & Brown Tax Advisors, a forward-thinking tax firm serving business owners in Oklahoma and beyond. He builds year-round tax strategies that help business owners keep more of what they earn and reach their goals. More about Brooks
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