100% Bonus Depreciation Is Back: A Major Tax Break for Aircraft Buyers

Sponsored by: Aerospace Reports

The 100% bonus depreciation is back on the table. The first 100% bonus depreciation came with the Tax Cuts and Jobs Act of 2017, during the first Trump administration.

Broadly speaking, the 100% bonus depreciation was allowed for qualifying property placed into service between Sept. 28, 2017, and Dec. 31, 2022. Aircraft were included as “qualifying property.” For example, if you bought an airplane valued at a million dollars, then as long as you followed the rules, you could depreciate a million dollars in the first year that the new law took effect, even if your actual cash outlay wasn’t a million dollars because of financing the asset.

The upside was that for that year, you would have a huge offset to your income, and therefore reduced tax liability. That 100% bonus depreciation had a phasedown schedule built into the law. The maximum bonus depreciation became 80% for qualifying property placed into service in 2023; 60% for qualifying property placed into service in 2024; and 40% for qualifying property placed into service in 2025. 

As of the July 4^th signing of the One Big Beautiful Bill, the 100% bonus depreciation not only returned, but it also became retroactive to Jan. 20, 2025. The law also eliminates the phasedown schedule of the 2017 tax law.

But the acquisition date matters: For the 100% deduction to apply, the qualifying property must have been both acquired and placed into service after Jan. 19, 2025. A binding written contract for acquisition made before Jan. 20, 2025, would not qualify for the 100% rate.

The bottom line: The 100% bonus depreciation is a great option for people looking to reduce their tax liability for the current year. Aircraft tend to be fairly expensive, so this offers a good offset for one’s business. Aircraft also tend to hold their value pretty well, which allows for flexibility in taking the bonus depreciation, whether you take 100% now or spread it out over subsequent tax years.

Which brings up some caveats: Not all states automatically conform to the federal tax changes regarding the bonus depreciation. Businesses should consult a tax advisor to understand how these federal changes interact with their specific state’s tax laws.

Choosing to depreciate 100% in Year 1 precludes the ability to depreciate the airplane in Years 2-5, the typical length of time businesses keep airplanes. That’s why AOPA Finance strongly recommends you consult your tax advisor and financial planner when you’re looking at buying an airplane for the express purpose of taking advantage of the bonus depreciation.

It is also our understanding that bonus depreciation typically isn’t available to individuals buying for personal purposes, not registering the aircraft to a business, or those who are not intending to use the aircraft for business purposes in any way. You need to be able to show that you have a valid business case for the use of the aircraft. That’s something your tax professional can help you determine.

Great advice. Great rates. Helpful and responsive reps you can trust. Three good reasons to turn to AOPA Aviation Finance when you are buying or refinancing an airplane. If you need a dependable source of financing with people who are on your side, just call 800.62.PLANE (800.627.5263), or click here to request a quote.