As a business owner or individual looking to purchase a small plane or jet, you’re likely no stranger to the complexities of aircraft financing. From navigating financing options to understanding tax implications, there’s a lot to consider when making a significant investment like this. One crucial aspect to consider is bonus depreciation, a tax incentive that can significantly impact your purchase decision.
What is Bonus Depreciation?
Bonus depreciation is a tax incentive that allows you to deduct a significant portion of the aircraft’s cost in the first year, rather than depreciating it over time. This can provide a substantial tax benefit, especially for businesses with high taxable income. As of July 4, 2025, with the enactment of the OBBBA, assets purchased from January 20, 2025, are eligible for 100% bonus depreciation with no cap on amount, and this rate will remain permanent at 100% until December 31, 2029.
Why Does It Matter?
Bonus depreciation can be a game-changer. By accelerating depreciation, you can reduce your taxable income, which in turn can lower your tax liability. This can free up more cash for your business or personal use. For example, if you’re purchasing a plane for $500,000, you could deduct the entire $500,000 from your taxable income in the first year.
Timing is Everything…
Given the new legislation, purchasing an aircraft in 2025 or anytime before December 31, 2029, could provide significant tax benefits. With 100% bonus depreciation, you can deduct the entire cost of the aircraft in the first year, providing substantial tax savings.
Working With Us During This Time…
When navigating the complexities of US Aircraft finance, it’s crucial to work with experts who understand the intricacies of bonus depreciation. A knowledgeable finance team can help you make informed decisions about your aircraft purchase, ensuring you maximize your tax benefits. They can also help you explore financing options, such as loans or leases, that can complement your tax strategy.
Key Considerations for Aircraft Owners and Operators
If you’re considering purchasing an aircraft, here are a few key considerations to keep in mind:
Taxable income: Make sure you have enough taxable income to benefit from the bonus depreciation deduction.
Placement in service: The aircraft must be placed in service in the year you want to claim the bonus depreciation.
Financing options: Consider how your financing structure will impact your tax benefits.
Tax planning: Work with a tax expert to ensure you’re maximizing your tax benefits and minimizing any potential tax liabilities.
Take Action
If you’re considering purchasing an aircraft, now is an excellent time to take advantage of the 100% bonus depreciation tax incentive. Contact our team today to discuss your options and ensure you’re making an informed decision. With the right guidance, you can enjoy the benefits of aircraft ownership while minimizing your tax liability.
