Will Full Bonus Depreciation Return?

With a new administration arriving in Washington, D.C., in January, some industry leaders are raising hopes of a return to full bonus depreciation on business aircraft sales. Congress renewed 100% depreciation as part of the Tax Cuts and Jobs Act of 2017, but that has been slowly phasing out since. Aircraft entering service this year are eligible for 60% accelerated depreciation.

Lawmakers last year had considered renewing the 100% bonus depreciation as part of a limited tax incentives bill that also would have renewed full research and experimental expensing. But unable to reach an agreement on some of the bill’s other measures, Congress pushed action on it into 2025, when many of the tax cuts established in the 2017 bill are set to expire.

While the bonus depreciation measure ostensibly received support on Capitol Hill, the current administration proposed lengthening, rather than shortening, depreciation schedules for business aircraft to match that of airliners. However, Congress is anticipated to quickly turn its attention to a tax bill once it reconvenes in January, raising optimism that the bonus depreciation measure would receive support on Capitol Hill as well as the White House.

“Phasing out the bonus depreciation initiative hurt the private aviation business in this country,” said Ben Shirazi, president of aircraft dealer-broker SmartJets and president of VIP Completions. “It is my hope, and it seems to be an industry-wide expectation, that the incoming Trump administration will reverse the phaseout, reset bonus depreciation to 100% for 2025, and—possibly—offer retroactive refunds.”

Shirazi said such a renewal appears to be consistent with President-elect Trump’s return to the Oval Office “and it is widely expected that this will happen in the early days of the next administration.”