Investing in a business aircraft can offer significant tax advantages—if you understand how depreciation rules work. As we enter 2025, aircraft owners and operators face a changing landscape with the phase-out of 100% bonus depreciation. At Jetvisors, we help clients not only acquire the right aircraft, but also navigate the financial strategies that maximize their investment. Here's what you need to know.

What Is Aircraft Depreciation?

Depreciation allows businesses to recover the cost of a capital asset, such as an aircraft, over time. Under the U.S. tax code, most business aircraft are classified as five-year Modified Accelerated Cost Recovery System (MACRS) property. That means owners can write off the cost of the aircraft over five years, assuming it's used for qualifying business purposes (IRS, 2024).

Bonus Depreciation: The 2025 Outlook

The Tax Cuts and Jobs Act of 2017 introduced 100% bonus depreciation for qualified property, including aircraft, placed in service between September 27, 2017, and December 31, 2022. However, starting in 2023, that bonus has been phased down by 20% each year, hitting 60% in 2025 (IRS, 2024; JetLaw, 2024).

This means if you buy and place an aircraft into service in 2025, you may only deduct 40% of the purchase price immediately, with the remainder depreciated over the standard MACRS schedule.

Requirements for Bonus Depreciation

To qualify for bonus depreciation:

1. The aircraft must be used predominantly (more than 50%) for business purposes
2. It must be new or used property that has not been previously used by the taxpayer
3. It must be placed into service within the tax year

For aircraft placed in service in 2025, timing is crucial. Even slight delays can shift your depreciation window and affect eligibility (Aviation Tax Consultants, 2024).

Part 91 vs. Part 135: Tax Treatment Differences

Aircraft operated under Part 91 (private/business use) are subject to stricter scrutiny regarding business use documentation. Aircraft under Part 135 (charter use) often qualify more easily for bonus depreciation because they generate business income, but owners must still demonstrate operational control and compliance with FAA and IRS rules (NBAA, 2024).

Section 179 vs. Bonus Depreciation

While Section 179 of the tax code allows for immediate expensing, it has lower limits and income restrictions than bonus depreciation. In 2025, Section 179 may still be useful for smaller purchases but is less common for aircraft due to its $1 million cap and phase-out thresholds (IRS, 2024).

Additional Tax Strategies

1. Cost Segregation Studies can accelerate depreciation by breaking the aircraft into components with shorter recovery periods.
2. Lease structures and business entity planning can affect tax efficiency.
3. Owners may also face recapture tax if the aircraft is sold or its use falls below the business threshold.

Work with aviation tax advisors to align your acquisition strategy with your financial goals.

Conclusion

With the phase-out of bonus depreciation accelerating, 2025 represents a narrowing window for maximizing aircraft tax benefits. Whether you're buying your first jet or adding to a fleet, understanding depreciation rules is essential. At Jetvisors, we help clients structure purchases for both operational and financial efficiency—backed by the best legal and tax advisors in the industry.

References

Internal Revenue Service. (2024). Tax Cuts and Jobs Act: A Comparison for Businesses. https://www.irs.gov/newsroom/tax-cuts-and-jobs-act-a-comparison-for-businesses

National Business Aviation Association (NBAA). (2024). Depreciation. https://nbaa.org/flight-department-administration/tax-issues/depreciation/

Aviation Tax Consultants. (2024). 60% Bonus Depreciation for 2025 Aircraft Deliveries. https://aviationtaxconsultants.com/60-bonus-depreciation-for-2025-aircraft-deliveries/

JetLaw, LLC. (2024). 2025 Bonus Depreciation Phaseout. https://jetlaw.com/2025-bonus-depreciation-phaseout/