US Senate Bill officially drops “ticket tax” on US private jet flights

Reynolds Jet hangar

A new US Senate Bill caused a Twitterstorm recently when it appeared to give tax breaks to US owners of private jets.

The Tax Cuts and Jobs Act, finalised on 2 December 2017, exempts private jet owners from paying taxes on various services, including maintenance and fueling.

Twitter users went into overdrive, believing that US private jet owners were exempt from all taxes.

However the fuss surrounds a two-part tax that is levied on every flight that an aircraft management company sells. The first part of that tax is set at 7.7%, the second is a flat amount for each individual flight.

Although this was originally introduced for airline passengers, it also applied to chartered private jet flights. But there was confusion surrounding whether the tax still would still apply to owners flying on their own aircraft.

Due to a lack of clarity with the language used in the original bill, the Inland Revenue Service (IRS) suspended taxing these flights in 2012. Although it later began auditing flights, it stopped doing this earlier this year.

According to a 2016 report by the Joint Committee on Taxation, the lost taxes would ammount to no more than $500,000 between 2017 and 2026.

Twitter was in uproar when details of the bill were released over the weekend, with some users helpfully tweeting the full applicable text:

However taxes on these flights haven’t applied since 2012, so the Bill simply clarifies that owner operated flights should not be taxed.