Private Jet Tax Deduction in 2026: What the One Big Beautiful Bill Changed

What Changed: OBBBA Restores 100% Bonus Depreciation

The One Big Beautiful Bill Act, signed into law in late 2025, eliminated the bonus depreciation phase-out that had been eroding the aircraft tax deduction since 2023. The change is significant: qualifying business aircraft placed in service after January 19, 2025, are once again eligible for 100% first-year bonus depreciation.

This is not a temporary extension. The legislation made 100% bonus depreciation permanent for qualifying property, including aircraft. The annual step-down schedule from the Tax Cuts and Jobs Act, which would have limited the deduction to just 20% in 2026, no longer applies.

For aircraft buyers, the math is straightforward. A $12 million Gulfstream G550 acquired for qualified business use can be fully depreciated in the year it is placed in service. Under the old phase-out, only $2.4 million of that cost would have been deductible in 2026.

The TCJA Phase-Out Is Dead

The Tax Cuts and Jobs Act of 2017 introduced 100% bonus depreciation but built in an automatic phase-out starting in 2023. That schedule looked like this:

The difference between column two and column three is the entire value proposition of the OBBBA for aircraft owners. An aircraft placed in service in 2027 under the old rules would have received zero bonus depreciation. Under current law, it receives 100%.

IRS Notice 2026-11: What It Actually Says

The IRS issued Notice 2026-11 as interim guidance on the restored bonus depreciation provisions. The notice is dense, but three points matter for aircraft transactions:

1. Placed-in-Service Requirement

The aircraft must be acquired and placed in service by the taxpayer. "Placed in service" means the aircraft is in a condition or state of readiness and available for its specifically assigned function. For most buyers, this means the aircraft must be airworthy, insured, and available for the owner's use. Sitting in a pre-buy inspection does not count.

2. Acquisition Date Matters

Aircraft acquired under a binding written contract executed before January 20, 2025, may still be subject to the old TCJA phase-out percentages. The OBBBA's 100% restoration applies to property acquired after January 19, 2025. If your purchase agreement was signed in December 2024 but the aircraft was delivered in March 2025, consult your tax advisor on which rules apply.

3. Used Property Qualifies

Both new and previously owned aircraft are eligible for 100% bonus depreciation, provided the taxpayer has not previously used the aircraft. This is critical for the pre-owned market: a $4 million Citation CJ3+ purchased on the secondary market qualifies for the same 100% deduction as a factory-new aircraft, assuming all other requirements are met.

"The acquisition date, not the delivery date, determines which depreciation schedule applies. Get the contract language right."

Qualifying Criteria: The Business Use Test

Aircraft are classified as "listed property" under IRS Section 280F. This designation imposes a critical threshold: the aircraft must be used more than 50% for qualified business purposes to be eligible for bonus depreciation.

Qualified business use includes:

• Transporting employees and executives to business meetings, facilities, and client sites
• Charter operations under Part 135 (the aircraft itself generates business revenue)
• Flight training and demonstration flights directly tied to the aircraft's business function
• Positioning flights necessary to support business missions

What does not qualify:

• Personal vacation travel by the owner or family members
• Commuting between a personal residence and a regular place of business
• Flights provided to employees as compensation (unless properly reported as income)

The 50% threshold is measured annually. If business use falls below 50% in any year, previously claimed depreciation is subject to recapture. This is not theoretical. The IRS audits aircraft usage with regularity.

Listed Property: Why Documentation Matters

Because aircraft are listed property, the IRS requires contemporaneous records of every flight. "Contemporaneous" means recorded at or near the time of the flight, not reconstructed at year-end. A credible flight log includes:

• Date and time of each flight leg
• Origin and destination airports
• Passengers on board and their business relationship to the owner
• Business purpose of the trip (specific, not generic)
• Flight hours and distance

"Business meeting" is not a sufficient purpose description. "Meeting with [Client Name] regarding [Project/Deal]" is. The IRS has disallowed deductions in cases where flight logs were too vague to substantiate business use. Your flight department. Proper management company selection is critical or management company should maintain these records as standard operating procedure.

New vs. Pre-Owned: Both Qualify

A common misconception is that bonus depreciation only applies to new aircraft. It applies to both, with one condition: the taxpayer must not have previously used the property. If you sell an aircraft and buy it back, the second purchase does not qualify.

For the pre-owned market, this is the most relevant provision. The majority of business aircraft transactions involve previously owned aircraft, and the full 100% deduction applies to all of them, provided the buyer meets the business use test and placed-in-service requirements.

The pre-owned market currently offers a compelling combination: normalized pricing after the post-pandemic correction, plus full bonus depreciation. A buyer acquiring a late-model super-midsize jet at today's prices and depreciating 100% in year one is capturing value that was not available 12 months ago.

State-Level Considerations

Federal bonus depreciation is only part of the equation. State tax treatment varies significantly:

Sales and use tax is a separate consideration. Some states exempt aircraft sales entirely. Others impose sales tax but offer exemptions for aircraft used in interstate commerce or placed into service outside the state. Where you take delivery, where you base the aircraft, and where you fly it all affect the sales tax calculation.

This is where state-specific counsel is not optional. A $15 million aircraft purchase in a state with 7% sales tax and no aircraft exemption carries a $1.05 million tax liability that can often be legally avoided with proper structuring and delivery planning.

The Recapture Trap

Depreciation recapture is the mechanism the IRS uses to claw back previously claimed deductions when the business use percentage drops below 50%. If you depreciate an aircraft 100% in year one and then use it 60% for personal travel in year three, you have a recapture event.

The recapture calculation converts the bonus depreciation to standard MACRS depreciation retroactively and treats the difference as ordinary income. On a $10 million aircraft, the recapture amount can be substantial, often exceeding $1 million in additional tax liability.

Avoiding recapture requires discipline:

• Maintain business use above 50% every year, not just the year of acquisition
• Document every flight with the specificity described above
• If personal use is increasing, consult your tax advisor before the year ends
• Consider a time-sharing or interchange agreement to formalize mixed-use arrangements

"The deduction is generous. The documentation requirement is the price of admission. Treat it accordingly."

Disclaimer: This article is informational and does not constitute tax advice. Aircraft tax law is complex and fact-specific. Consult a qualified aviation tax attorney or CPA regarding your individual circumstances before making acquisition decisions based on tax considerations.