100% Bonus Depreciation on Aircraft in 2025: Your Tax Planning Guide

The extension of 100% bonus depreciation for aircraft purchases in 2025 represents a significant tax planning opportunity for businesses and qualified buyers. After the scheduled reduction to 40%, new legislation restoring full bonus depreciation has reignited the aircraft acquisition market and created urgent timing considerations for year-end.

Key takeaway: Aircraft purchased and placed in service by December 31, 2025, may qualify for 100% first-year bonus depreciation. But meeting the deadline requires strategic planning, experienced partners, and early action.

What Is Bonus Depreciation for Aircraft?

Bonus depreciation allows businesses to immediately deduct a significant percentage of an aircraft's purchase price in the first year, rather than depreciating it over the standard five to seven year recovery period.

Originally, 2025 was scheduled for only 40% bonus depreciation. With the extension restoring 100%, a qualifying aircraft purchased for $10 million could potentially generate a $10 million tax deduction in the first year, subject to IRS qualifications and business use requirements.

The gap between 40% and 100% represents $6 million in first-year deductions on a $10 million aircraft—a substantial acceleration affecting cash flow, investment returns, and overall acquisition economics.

Who Qualifies for Aircraft Bonus Depreciation?

What aircraft purchases qualify? The aircraft must meet specific IRS requirements:

Business use requirements: Aircraft must be used more than 50% for qualified business purposes. Personal use cannot exceed business use in the first year. Detailed flight logs and business justification are required. Entertainment flights may not qualify toward business use percentage.

Eligible aircraft: New aircraft where first use begins with the taxpayer qualify, as do pre-owned aircraft that are "new to you" purchased after September 27, 2017. This includes light jets, midsize jets, super-midsize and large-cabin business aircraft, and turboprops used for business transportation.

Timing requirements: The aircraft must be purchased AND placed in service by December 31, 2025. "Placed in service" means available for business use, not necessarily the first flight. Closing, registration, and operational readiness all factor into timing.

Important: Consult with qualified tax advisors to ensure your specific situation qualifies. Tax laws are complex and individual circumstances vary significantly.

The 2025 Aircraft Market

What's happening in aircraft sales? According to JETNET data, the pre-owned business jet market showed transaction volume up approximately 10% year-over-year, average sales price holding steady around $7.5 million, and days on market at approximately 220 days.

Expected impact of the extension: Industry experts anticipate significant market acceleration in Q3-Q4 2025 with increased transaction velocity as buyers rush to meet deadlines, upward pressure on pricing due to demand surge, extended timelines for inspections and financing due to capacity constraints, and competitive positioning for desirable aircraft models.

Translation for buyers: Starting the acquisition process in Q2 or early Q3 2025 provides negotiating leverage, better aircraft selection, and time buffer for inevitable delays.

Insurance Market Improvement

General aviation insurance is showing significant improvement after several challenging years. According to Todd Guelich, Senior VP at Assured Partners: "The general aviation sector, especially policies written for a fleet of managed aircraft, have experienced measurable relief during the first two quarters of 2025."

Key improvements include restored coverage options, higher liability and hull limits, lower deductibles, expanded endorsements, and premium stability with elimination of year-over-year increases for well-managed fleets.

Critical Timeline: Why Early Action Is Essential

How long does it take to buy an aircraft? The complete process takes 3-10+ months depending on complexity:

• Aircraft search and selection: 2-8 weeks
• Pre-purchase inspection scheduling: 4-12 weeks (the critical bottleneck—facilities book months in advance)
• Pre-purchase inspection execution: 1-3 weeks
• Financing and legal documentation: 2-6 weeks
• FAA registration and authorizations: 2-8 weeks (longer for Part 135)
• Aircraft conforming and management setup: 2-6 weeks

Critical insight: Starting in Q4 2025 significantly increases risk of missing the December 31 deadline. Q2 or early Q3 2025 provides necessary buffer for delays.

Part 91 vs. Part 135: Understanding Your Options

What's the difference between Part 91 and Part 135?

Part 91 (Private Use): Personal and business use only. No commercial charter revenue. Lower regulatory burden with simpler setup process.

Part 135 (Charter Use): Commercial charter authorized with revenue generation through third-party flights. Higher regulatory standards. Longer setup timeline. Ability to offset ownership costs through charter revenue.

If considering Part 135 to offset costs, add 2-8 weeks for FAA certificate amendments, aircraft conforming, and crew training. You'll need operational planning including usage profile analysis, aircraft suitability assessment, and financial projections with conservative and optimistic revenue scenarios.

Understanding Charter Economics

How do charter revenue models work? Most companies use traditional 85/15 revenue split or guaranteed revenue models.

Traditional 85/15 Split

Aircraft marketed to charter broker network. Revenue split: 85% to owner, 15% to management company.

Owner's 85% covers: Direct operating costs (fuel, crew, catering, landing fees), variable maintenance, and positioning flights.

Management's 15% covers: Aircraft marketing, operations personnel, client services, safety oversight, and administrative infrastructure.

Monthly management fees (typically $3,000-$8,000) cover direct aircraft oversight, NOT the full operational ecosystem. The 15% charter split supports broader business services.

Pros: Upside potential, market-rate pricing, aligned incentives.Cons: Revenue uncertainty, market dependent, requires patient capital.

Guaranteed Revenue Models

Some companies offer charter revenue guarantees or leaseback arrangements with fixed monthly payments, revenue minimums with participation above thresholds, or full leaseback where the company assumes all costs.

Why companies offer guarantees: Fleet growth strategy using owner capital, strong retail charter demand with predictable revenue, or aggressive growth and market positioning (higher risk).

Evaluation considerations: Company financial stability, charter demand evidence, contract terms, exit provisions, and economic trade-offs between certainty and upside.

Your 2025 Action Plan

Immediate Actions (If You Haven't Started)

• Consult tax advisor for bonus depreciation eligibility
• Define mission requirements (passenger capacity, range, routes)
• Establish budget (purchase price, operating costs, fees)
• Select management company (Part 91 vs. 135, charter economics)
• Reserve PPI slot (critical capacity constraint)
• Engage aircraft broker for search

Within 60 Days

• Assemble professional team (attorney, lender, tax advisor, insurance broker)
• Review financing options and pre-approval
• Evaluate charter economics if considering Part 135
• Identify target aircraft and narrow to 2-3 candidates

Within 90 Days

• Execute letters of intent and begin negotiation
• Schedule pre-purchase inspections
• Finalize financing and lock rates
• Complete PPI and accept aircraft or negotiate repairs

Before December 31, 2025

• Execute purchase agreement and deposit funds
• Begin FAA paperwork (registration, certificates, OpSpecs)
• Coordinate and bind insurance
• Close transaction and place aircraft in service
• Document business use intent for IRS compliance

Frequently Asked Questions

Does 100% bonus depreciation apply to used aircraft? Yes, pre-owned aircraft that are "new to you" purchased after September 27, 2017, generally qualify, subject to IRS requirements and business use standards.

What happens if I miss the December 31, 2025 deadline? Aircraft purchased in 2026 will likely qualify for only 20% bonus depreciation per the scheduled phase-out, representing a significant reduction in first-year tax benefits.

Can I use the aircraft for personal trips and still qualify? Yes, but business use must exceed 50%. Detailed flight logs documenting business purpose are essential for IRS compliance.

Should I buy new or pre-owned to maximize tax benefits? Both can qualify for 100% bonus depreciation. Focus on aircraft that best meets your mission requirements and budget. Pre-owned aircraft often offer better value and faster delivery.

How do I prove business use to the IRS? Maintain detailed flight logs documenting departure/arrival airports, passengers, business purpose, and flight time. Work with experienced tax advisors to establish compliant documentation systems.

Why Choose Elevate Jet

With 30 years of aviation excellence, Elevate Jet provides comprehensive aircraft acquisition and management services designed to meet your 2025 deadline:

Aircraft acquisition: Experienced team with market intelligence, guaranteed pre-purchase inspection slots (critical for 2025), negotiation support, and established relationships with brokers, lenders, and attorneys.

Aircraft management: Part 91 and Part 135 options, self-conforming capabilities reducing timelines, strong FAA relationships, and transparent charter economics with detailed financial pro formas.

Operational excellence: 24/7 worldwide support, IS-BAO registered safety management systems, experienced crew recruitment, and comprehensive client services.

Integrated services: In-house MRO maintenance capabilities (Elevate MRO), paint and refurbishment, avionics installation, and complete lifecycle support from acquisition through eventual sale.

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