Disclaimer: Jecobra Aviation is a professional aircraft brokerage that provides aircraft transaction representation and consulting. We are not qualified tax professionals. This article is for informational purposes only. Consult an Aviation Tax Expert for tailored and qualified advice.
On July 4, 2025, Congress passed the "One Big Beautiful Bill of 2025," marking a significant shift in U.S. tax policy. While this legislation encompasses numerous provisions affecting various sectors, several key changes directly impact aircraft buyers and owners. Understanding these changes is crucial for anyone considering an aircraft purchase or managing their existing fleet.
1. Bonus Depreciation Changes
The bill introduces changes to bonus depreciation that aircraft buyers need to understand:
- Gradual Phase-Out: The 100% bonus depreciation that has been available for qualified aircraft purchases is being phased out over the next several years
- Timeline Considerations: Aircraft placed in service before December 31, 2026, may still qualify for higher depreciation rates
- Planning Importance: The timing of your aircraft purchase can significantly impact the tax benefits available
2. Section 179 Expensing Limits
Section 179 expensing, which allows businesses to deduct the full purchase price of qualifying equipment, has seen adjustments:
- Increased Caps: The deduction limit has been adjusted for inflation
- Aircraft Eligibility: Certain aircraft continue to qualify, but restrictions on passenger vs. cargo configurations remain
- Phase-Out Thresholds: Be aware of income-based phase-outs that may affect your eligibility
3. Like-Kind Exchange Modifications
The bill modifies rules around 1031 like-kind exchanges:
- Aircraft Exclusions: Specific provisions affect how aircraft can be used in like-kind exchanges
- Timing Requirements: Stricter timelines for completing exchanges
- Documentation Needs: Enhanced record-keeping requirements for qualifying exchanges
4. International Operations Impact
For aircraft used in international operations:
- Cross-Border Tax Treatment: New rules affecting aircraft used for international charter or cargo operations
- Foreign Income Considerations: Changes to how foreign-earned income from aircraft operations is taxed
- Reporting Requirements: Enhanced disclosure requirements for international aircraft operations
5. Luxury Tax Considerations
The bill includes provisions related to luxury goods taxation:
- Threshold Adjustments: Modified thresholds for what constitutes a luxury aircraft purchase
- Exemptions: Certain business use cases may qualify for exemptions
- State-Level Implications: Federal changes may trigger corresponding state tax adjustments
What This Means for Aircraft Buyers
Act Now or Wait?
The changes create both opportunities and challenges:
- Immediate Purchases: May still capture favorable depreciation rules before phase-out
- Strategic Timing: Consider your tax year and when to place aircraft in service
- Long-Term Planning: Factor in reduced tax benefits for purchases beyond 2026
Consult with Professionals
Given the complexity of these changes:
- Aviation Tax Experts: Engage specialists who understand both aviation and tax law
- Aircraft Acquisition Advisors: Work with brokers who can help time your purchase optimally
- Legal Counsel: Ensure all documentation and structures comply with new requirements
How Jecobra Can Help
At Jecobra Aviation, we work closely with aviation tax professionals and can help coordinate your aircraft acquisition to align with your tax strategy. While we don't provide tax advice, we can:
- Time your aircraft purchase to maximize available benefits
- Structure transactions to meet specific requirements
- Connect you with qualified aviation tax professionals
- Provide market intelligence on current opportunities
Conclusion
The One Big Beautiful Bill of 2025 represents a significant shift in the tax landscape for aircraft buyers. While some provisions reduce benefits, strategic planning and proper timing can still yield substantial advantages. The key is understanding the changes and working with qualified professionals to navigate this new environment.
For personalized guidance on aircraft acquisition in light of these tax changes, contact our team at Jecobra Aviation. We're here to help you make informed decisions that align with your business goals and tax strategy.
Contact Jecobra Aviation
- Phone: (830) 362-1150
- Email: info@jecobra.com
- Web: https://jecobra.com
This article is for informational purposes only and does not constitute tax advice. Always consult with qualified tax professionals before making financial decisions.
About the Author
Grant Weiner
Director of Flight Operations
Director of Flight Operations with 1,500+ hours of flight time and 8 years of aviation experience including flight instruction, scheduling and dispatching, flight crew staffing, and Part 91 aircraft management. Grant ensures operational excellence for all Jecobra clients.