The major impact of tax reforms on general aviation is the immediate expensing of new and used equipment. The new law permits 100-percent immediate expensing by the taxpayer for both factory new and pre-owned aircraft as long as it is the taxpayer’s first use of the aircraft.
Under the legislation, after 2022, there will be a phasedown of bonus depreciation in increments of 20% each year for qualified aircraft acquired and placed in service before 2027. Another resolution was the dispute over airline ticket taxes improperly imposed on aircraft management fees; the aviation fuel tax therefore will change from the current 7.5% federal transportation excise tax.
The legislation contains important changes for business aviation in several areas.
- 100-Percent Expensing (Bonus Depreciation)
- Like-Kind Exchanges
- Prohibition on Deduction of Employees’ Commuting Expenses
- Disallowance of Travel Expenses “Directly Related” to Business
- Repeal of Miscellaneous Itemized Deductions, Including Employee Business Expenses
- Transportation Excise Tax Does Not Apply to Owner Flights on Managed Aircraft
For more information on the Tax Reform and it’s impacts on Business Aviation, please visit www.nbaa.org/admin/taxes/federal/tax-reform-highlights-for-business-aviation.php