Private jet buyers got a big bonus from Trump's new tax law (ERJ, GD, TXT)

pulse

February 28, 2018 7:16 PM

Through bonus depreciation, private jet buyers will not be able to deduct 100% of its cost immediately.

The Trump Administration's
The new policy allows private jet buyers to deduct 100% of the plane's cost immediately.
This is a change in tax code that is expected to boost demand for private jets.

A recent change in the tax the US tax code is stirring up interest in high-end private jets. As part of the Trump Administration's tax reform package which passed in late 2017, transportation items such as private jets are now subject to 100% bonus depreciation.

According to the National Business Aviation Association, this allows a private jet owner to deduct 100% of its cost immediately.

However, the NBAA is keen to point out that the new policy doesn't entitle private jet buyers to more depreciation, just the ability to access those benefits at a quicker rate. In this case, immediately.

For some of the world's wealthiest individuals, this deduction accounts for much, if not all, of their millions in tax liability. Which means, for some, the jet could be essentially free.

This is much-welcomed news for an industry on the mend after a couple of tough years.

Owners of aircraft that enters service between September 28, 2017, and December 31, 2022, will get to deduct 100% of its cost immediately. However, "certain aircraft" and "longer production period property" are eligible for a one-year extension. For everyone else, bonus depreciation rates will decrease by 20% every year starting in 2023 until 2027 when it hits zero.

Aircraft with binding sales agreements signed on or before September 27, 2017, will be subject to 50% bonus depreciation under the previous tax code.

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