Depreciation is the method the IRS allows businesses to use to recover the cost of an asset over time through annual deductions on their tax returns. Generally speaking, when you buy an aircraft for business use, the IRS won’t let you deduct the full cost as an expense right away (unless you qualify for bonus depreciation). Instead, you recover that cost over multiple years through depreciation.
How Aircraft Depreciation Works
As an aircraft buyer, where and how you take delivery can create or avoid large sales or use tax burdens. We design strategies — such as fly-away exemptions, leasing structuring, or interstate commerce exemptions — to minimize tax liability before you close.
- Determine the Asset’s Class Life – Most aircraft (business use) fall under the 5-year or 7-year property category. Typically, aircraft operated under Part 91 fall under a 5-year property category, and aircraft operated under Part 135 fall under a 7-year property category.
- Depreciation Methods – Jetlaw will work with you to determine which method will work best for you based on your business strategy:
- MACRS (Accelerated Depreciation): This method is the most common and favorable for aircraft. Allows for larger deductions in early years.
- Straight-Line (SL): Deduct the same amount each year. This method is required in some cases (like failure to maintain 51% business use, international use or alternative minimum tax adjustments).
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- Start Depreciating When Placed in Service. Depreciation begins once the aircraft is ready and available for use, not necessarily the day you bought it. For example, if you purchase the aircraft in December of 2025 but do not take a business flight until January of 2026, the asset is placed into service in 2026.
What Bonus Depreciation Means for Aircraft Owners in 2025
Bonus depreciation (under IRC §168(k)) is a form of accelerated depreciation that allows a business to immediately deduct the cost of an asset’s purchase price right away, boosting cash flow and reducing taxable income.
Immediate Deduction
Applies to Used Aircrafts
As of January 20, 2025, businesses can deduct 100% of the cost of an aircraft in the first year the asset is placed into service.
Applies to both new and used qualified property (if it’s the taxpayer’s first use).
Must Be Business Use
The asset must be used predominantly (more than 50%) for business to qualify.
How Jetlaw Helps Clients Capture Maximum Deductions Safely
- Properly document bonus depreciation eligibility.
- Time acquisition and usage to meet “placed in service” requirements.
- Avoid recapture through ongoing compliance.
Example: How a $7 Million Aircraft Generates Immediate Tax Savings
We guide clients through real-world examples tailored to their aircraft and usage model. Here is an example of how bonus depreciation and the remaining depreciation is calculated. We will make the following assumptions for purposes of our hypothetical:
- A new aircraft is purchased in Q1 2025 by a business for $7,000,000 and is placed into service on February 15, 2025.
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- Though the aircraft is eligible for the 100% bonus depreciation allowance in 2025, the business decides to elect out of bonus depreciation.
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- The aircraft is subject to a 7-year recovery period depreciable under MACRS.
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- The aircraft is used 100% for business purposes, and no entertainment use occurs.
Calculate the Depreciation: Since the taxpayer elected out of bonus depreciation, we must look at Table A-1 of IRS Publication 946 to determine what percentage of the aircraft is depreciable for the purposes of MACRS depreciation. The depreciation is calculated as follows:
| Taxable Year | Basis of Asset | Applicable Depreciation Percentage from Table A-1 | Depreciation for the Taxable Year |
|---|---|---|---|
| 2025 | $7,000,000 | 14.29% | $1,000,300 |
| 2026 | $7,000,000 | 24.49% | $714,300 |
| 2027 | $7,000,000 | 17.49% | $1,224,300 |
| 2028 | $7,000,000 | 12.49% | $874,300 |
| 2029 | $7,000,000 | 8.93% | $625,100 |
| 2030 | $7,000,000 | 8.93% | $625,100 |
| 2031 | $7,000,000 | 8.92% | $624,400 |
| 2032 | $7,000,000 | 4.46% | $312,000 |
What Costs Can Be Added to Your Aircraft’s Depreciable Basis
In addition to the cost of the aircraft itself, the ancillary costs paid to acquire the aircraft should be included in the depreciable basis of the aircraft (capitalized) and not deducted immediately (expensed). Common expenses include broker fees, customs fees, pre-purchase inspection fees, legal fees, and other similar expenses related to purchasing the aircraft.
Common Depreciation Pitfalls — and How Jetlaw Helps You Avoid Them
Jetlaw helps clients prevent these costly mistakes:
- Taking bonus depreciation is mandatory, but a taxpayer may elect out of taking bonus depreciation. Taxpayers that are forecasting a loss for the current year may prefer not to use bonus depreciation.
- Purchasing the aircraft in 2025 is not enough to qualify for bonus depreciation. The aircraft must be “placed in service” in your business before the year ends.
- To be eligible for bonus or accelerated depreciation (MACRS), the aircraft must be used more than fifty percent (50%) for business purposes. In addition, international use of the aircraft can restrict the ability to qualify for bonus or accelerated depreciation.
- Failure to meet the predominant use test in any year that the aircraft is being depreciated may result in depreciation recapture.
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- Chartering the aircraft (in the year acquired or in future years) may require the aircraft to be reclassified as “transportation property” which increases the aircraft’s depreciation schedule from 5 to 7 years (and may also result in depreciation recapture).
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- Flights used for entertainment purposes (whether business or personal) will adversely impact depreciation deductions, including bonus depreciation.
State Tax Laws Don’t Always Follow Federal Bonus Depreciation Rules
Some state income tax codes, such as California and New York, do not allow bonus depreciation in the calculation of state taxable income. Do not assume that your aircraft will qualify for the same write-off at the state level.