The profit (and pitfalls) of 100% bonus depreciation

opinion

by Alasdair Whyte

July 14, 2025

Apart from the poor souls who work in hospitality, it genuinely seems like everyone in the northern hemisphere is either on holiday, just back from a holiday (which they keep talking about), or about to go on holiday. This is how it should be. Everyone involved in aircraft transactions should try to relax and recover as much as they can. It is going to be a busy end to the year.

Donald Trump signed his Big, Beautiful Bill recently. The key thing for business aviation is that it brings back accelerated or bonus depreciation on equipment purchases. This means that companies buying aircraft may be able to write off 100% of their purchase in the first year. This will stimulate demand for business jets.

“This is an excellent development for our industry. Now that there is tax certainty it will help people plan. If you have business use and you really need to use an aircraft, this is an excellent tool,” said David Shannon, chair of the Business Aviation Practice at Lewis Brisbois, speaking on CJI’s Town Hall last week. Shannon highlighted how many people who took advantage of bonus depreciation before it was cut, can now use it to replace their aircraft. (To qualify they must sell and buy in the same year).

The last months of every year are always busy. Bonus depreciation makes things even more frantic. US buyers are desperate to close deals in the calendar year and make at least one business flight to qualify for 100% depreciation.

But there are other many pitfalls they should be aware of. “If you’re a first-time buyer, please understand that we have to make the rules for the FAA, the IRS, the SEC [Securities and Exchange Commission] if you publicly traded and state taxes come together. The different agencies have rules for different purposes so do come together well,” said Shannon.

Buyers need an expert deal team. “I tell my clients buying an aircraft is unlike any other asset you’re ever going to buy. If you want bonus depreciation, there is a lot of structure and planning to begin with,” said Angel Houck, co-founder, Houck & Christensen CPAs. “We like to get together with the legal side and the broker early on to start talking about moving those pieces.” Houck says sometimes the solution can be something as simple as changing the ownership of the limited company, holding off selling charter for a few months or using charter rather than your aircraft for a holiday. (There are stories of spouses at large corporations being turned away from the aircraft in December to avoid breaching 100% business flight rules in the first year.)

“There are a lot of little things we can do that can be huge tax dollar savings and solidify that bonus. But you have to talk about them up front because if you miss it, all those other things that come into play too, state and local taxes and all these other big dollar amounts,” said Houck. “Early planning is key because you can’t go back and change it afterwards.”

Ryan DeMoor, head of tax, MySky, stressed that you also need to keep records for the whole time the aircraft is owned: “There is tracking that needs to happen during the life of that asset. It is not a year-one thing, it is a multi-year thing.”

He added that buyers should not get carried away chasing bonus depreciation. “Just because bonus is back, you should not go out and buy an airplane. Those types of deals typically end poorly for people,” he said during our Town Hall. “If you are going to be purchasing an aircraft anyway, it’s certainly helpful to take advantage of it.”

Every transaction is unique and small details matter. If you are a US buyer who wants to take advantage, call a specialist aviation tax adviser and discuss your situation – as soon as you get back from your vacation.