It’s hard to overstate how impactful bonus depreciation has been to private aviation.
The fiscal policy is now woven into the framework of U.S. tax legislation, and it’s become a pivotal stimulus in the aviation industry, particularly the private aircraft market. Through a series of legislative changes over the years, bonus depreciation has been instrumental in stimulating growth and revitalizing ways in which aircraft manufacturers can market and reach new consumers.
Bonus depreciation, essentially, is a strategic tax incentive designed to foster business investments. It first became a mainstream fiscal tactic in the aftermath of the 9/11 attacks and the economic downturn of the early 2000s.
President George W. Bush’s administration introduced the policy through the Job Creation and Worker Assistance Act of 2002 that allowed for a 30 percent deduction on capital asset expenses. By 2003, this was increased to 50 percent, catalyzing business investments across various sectors, including aviation.
However, this provision oscillated through various phases, which was an indirect reflection of economic stability and legislative goals. After a temporary lapse from 2004 to 2007, the financial crisis of 2008 prompted its reactivation at 50 percent to stimulate economic recovery under the Economic Stimulus Act of 2008 and the American Recovery and Reinvestment Act.
President Barack Obama notably raised the rate to a full 100 percent in 2011, which made the immediate ability to expense private jet purchases for business use highly attractive and significantly impacted sectors like aviation.
Trump Era and One Big Beautiful Bill
Thanks to the Tax Cuts and Jobs Act (TCJA) of 2017 under President Donald Trump, 100 percent depreciation was reinstated but scheduled to phase out gradually.
- READ MORE: White Paper: Maximize Tax Efficiency With Bonus Depreciation for Business Jets
- READ MORE: One Big Beautiful Bill Act Reinstates Bonus Depreciation for Aircraft
The private aviation sector saw some of the most pronounced effects, as businesses could now expense newly purchased and even used aircraft completely in the first year of service. This change played a significant role in boosting aircraft sales from 2018 until its gradual reduction beginning in 2023.
In 2025, the policy landscape took a dramatic turn when Trump signed the One Big Beautiful Bill Act, permanently reinstating 100 percent bonus depreciation for business assets, including private jets. This legislation reversed the phased-out percentages and provided a robust tax incentive that revitalized interest and activity within the aviation industry.
Impact on Private Aircraft Market
The return of 100 percent bonus depreciation has been proven to have significantly stimulated the private aircraft market.
Aircraft transactions saw a marked increase as both businesses and individuals sought to capitalize on the substantial tax savings. The ability to deduct the entire cost of an aircraft in the first year led to a surge in purchasing activity, particularly in pre-owned jets, which gained depreciation eligibility post-2017.
This fiscal policy created an attractive opportunity for a diverse set of buyers, ranging from corporate entities to high-net-worth individuals. By utilizing this tax mechanism, buyers could significantly reduce their taxable income, invest in newer aircraft models, implement upgrades, or expand private fleets with greater financial flexibility. The upfront tax savings also empowered operators to reinvest in their businesses and ultimately contribute to broader economic growth within the aviation market.
The ripple effects of bonus depreciation have extended beyond ownership, though.
Leasing and charter services have also seen major gains. As more aircraft entered the market, there were tangible benefits for jet card users and charter flight consumers in terms of fleet availability and pricing competitiveness.
For operators, placing aircraft into charter services under Part 135 became a viable strategy to bolster utilization metrics required for tax compliance and to capture additional revenue streams.
Broader Industry Implications
The aviation industry’s response to bonus depreciation is apparent in more than sales figures alone.
There has been an increased demand for aircraft stimulated ancillary services, including financing, aircraft management, maintenance, and appraisal services. Manufacturers, brokers, and maintenance repair organizations (MROs) also have experienced heightened activity. As a result, that prompted capacity expansions and technological innovations to meet growing market demands.
On a macroeconomic level, bonus depreciation invigorated the aviation sector’s contribution to the U.S. economy. Jobs were created across various segments (manufacturing, maintenance, and operations).
The policy also encouraged innovation within the industry, as quite a few companies sought to upgrade technologies and improve efficiencies through capital investments as a direct result of bonus depreciation.
If you’re a serious buyer, you have to maintain rigorous IRS compliance and precise documentation of business-related use to avoid depreciation recapture. Understanding and adapting to new legislation is the only way to truly maximize these tax benefits.
Bonus depreciation has undeniably acted as a catalyst in the private aviation industry. It has driven investments and expanded market activities at the very least.
The private aircraft market is poised for continued growth and innovation. Right now, there is still a unique opportunity to leverage these tax benefits. With a strategic approach to compliance and investment, you or your company can get into your own private aircraft while the market is ripe.
Don’t forget to reach out to FLYING Finance today to help you with your financing needs, and we’ll walk you through every step of the process so you can take full advantage of this opportunity.
