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A change in United States tax law is giving business aircraft buyers a powerful financial incentive to purchase jets sooner rather than later. The One Big Beautiful Bill Act, signed into law on July 4, 2025, restored 100% bonus depreciation for qualifying business property, including eligible aircraft acquired and placed in service after January 19, 2025. Businesses can now deduct the full qualifying cost of an aircraft in its first year instead of spreading depreciation deductions across multiple tax years. The provision also removed the scheduled phaseout that had been reducing the incentive under the 2017 Tax Cuts and Jobs Act.
The restored deduction is influencing an aircraft market already facing strong demand, limited inventory in some categories, and lengthy manufacturer backlogs. Honeywell’s October 2025 business aviation outlook identified the tax change as a factor expected to encourage additional purchases, forecasting that new business jet deliveries would rise 5% in 2026 compared with 2025. Meanwhile, members of the International Aircraft Dealers Association (IADA) reported 333 closed pre-owned aircraft deals in the first quarter of 2026, up from 316 a year earlier. Although the tax incentive is not the sole driver of these trends, it gives eligible businesses a reason to reconsider the timing and structure of aircraft acquisitions.
A Tax Incentive Returns After Years Of Phaseouts
Bonus depreciation allows businesses to deduct a qualifying portion of an asset’s cost sooner than under ordinary depreciation schedules. For eligible aircraft, the deduction can cover the entire qualifying basis in the year the aircraft is placed in service. The benefit is a timing advantage for tax purposes, not a rebate from the government or a reduction in the aircraft’s purchase price. Its financial value depends on the buyer’s taxable income, tax position, financing arrangements, and ability to claim the deduction.
The incentive gained prominence under the Tax Cuts and Jobs Act of 2017, which introduced 100% bonus depreciation for many qualifying assets. Under the original schedule, the allowance began declining after 2022, reaching 60% in 2024 and 40% in 2025. Without subsequent legislation, it would have fallen to 20% in 2026 before disappearing in 2027. The One Big Beautiful Bill Act reversed that trajectory by restoring 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025.
The new provision is described as permanent because the legislation does not establish a scheduled phaseout. That gives businesses more certainty when planning acquisitions beyond a single tax year, although Congress could amend tax law in the future. Buyers can also generally consider eligible used aircraft, subject to the applicable requirements, rather than being limited to factory-new jets. The result is a wider set of potential transactions across the business aviation market. However, the deduction does not make an otherwise uneconomic purchase automatically attractive. An aircraft still brings operating expenses, maintenance obligations, insurance costs, crew salaries, hangar fees, and potential depreciation in resale value. The tax provision changes the financial calculation, but it does not replace the need to assess whether an aircraft serves a genuine business purpose and whether its total ownership costs are justified.
Business Use And Delivery Timing Determine Eligibility
To claim bonus depreciation, an aircraft must satisfy applicable tax requirements, including qualifying business use and being placed in service within the relevant tax year. A signed purchase agreement, deposit, or completed payment does not by itself establish that the aircraft is in service. The aircraft must be ready and available for its intended business use, and the buyer must maintain documentation supporting the acquisition and its use.
Aircraft buyers also need to distinguish business travel from personal flying. Generally, the aircraft must be used more than 50% for qualified business purposes to qualify for the relevant accelerated depreciation treatment under the rules applicable to listed property. Personal trips, entertainment-related travel, and other nonqualifying uses may affect the calculation. If business use does not satisfy the required threshold, the buyer may have to use slower depreciation methods or face recapture of deductions if the use later falls below the threshold. The precise outcome depends on the facts and applicable tax provisions, so buyers should obtain advice from a tax professional familiar with business aviation.
This requirement makes operational planning particularly important when a purchase is scheduled near the end of a tax year. A company that orders an aircraft in November but cannot place it in service until the following year should not assume that the purchase creates a deduction in the year the agreement was signed. Aircraft delivery, completion work, registration, crew readiness, and operational preparation can all affect when the jet becomes available for its intended use. The rules can also differ according to the aircraft, the transaction, and the buyer’s circumstances. Certain aircraft may fall under special provisions, and taxpayers can make elections that affect the amount or timing of depreciation. The IRS issued additional guidance in January 2026 concerning the restored allowance. Because a mistake can create a substantial tax liability, purchasers should coordinate with aviation counsel and qualified tax advisers before structuring a transaction around the deduction.
New Aircraft Demand Could Strengthen Further
The restored deduction arrived as manufacturers were already reporting sustained interest in business aircraft. Honeywell’s 2025 Global Business Aviation Outlook forecast 8,500 new business jet deliveries worldwide between 2025 and 2034, with a combined value of approximately $283 billion. The report anticipated average annual delivery growth of 3% over the decade and projected that 2026 deliveries would be 5% higher than in 2025. Surveyed operators specifically identified the return of 100% bonus depreciation as a factor likely to encourage additional purchases.
Forecasted Percentage of Jet Deliveries Over the Next Three Years | |
|---|---|
Region | Percentage |
North America | 70% |
Europe | 14% |
Latin America | 7% |
Asia-Pacific | 5% |
Middle East & Africa | 3% |
These projections should not be interpreted as proof that the tax law alone will produce higher deliveries. Fractional ownership, fleet replacement requirements, aircraft utilization, economic conditions, and new model introductions also influence demand. Nevertheless, bonus depreciation can strengthen the case for replacing an aging aircraft or moving forward with a purchase that a business had already been considering. When the potential tax deduction is available immediately, the after-tax cost of acquiring an aircraft may look more attractive than it did under a phased-down allowance.
The effect could be especially visible among buyers with profitable businesses and planned capital expenditures. A company expecting substantial taxable income may value the opportunity to accelerate a deduction into the current year. Businesses with limited taxable income, however, may not realize the same immediate benefit. The deduction’s usefulness depends on individual tax circumstances, meaning the incentive will not affect all prospective purchasers equally. Manufacturers also cannot necessarily accelerate deliveries simply because customers have a stronger tax incentive to buy. Existing order backlogs, supply chain constraints, and completion schedules can restrict how quickly new aircraft reach customers. The law may influence when buyers commit to purchases, but the resulting delivery figures will also reflect the industry’s ability to build and deliver aircraft.
Pre-Owned Jets Are Also Benefiting From The Incentive
The tax change is relevant to the pre-owned market as well as new aircraft orders. IADA members closed 333 pre-owned business aircraft deals in the first quarter of 2026, compared with 316 during the same period in 2025. The association described the market as stable at elevated levels, with demand continuing to outpace available supply in several segments. Its reporting also identified firm aircraft values and sustained buyer interest as important features of the market.
Industry participants have cited bonus depreciation alongside stock-market performance as a factor supporting transaction activity. Buyers who qualify may be able to acquire an eligible used jet and deduct its qualifying cost in the first year, provided the aircraft and transaction meet the applicable requirements. This can expand the pool of attractive acquisition options for companies that do not need a factory-new aircraft or prefer to avoid the wait associated with a new production slot.
Late-model aircraft may be particularly appealing because they can offer modern avionics, contemporary cabin equipment, and relatively low utilization without the lead times associated with new deliveries. However, strong demand for well-maintained aircraft can also support asking prices, reducing the savings available to buyers. An accelerated deduction should therefore be evaluated alongside the purchase price, maintenance history, upcoming inspections, engine programs, and expected resale value. The incentive may also influence seller behavior. Owners who had been considering a sale could find a larger pool of motivated buyers, while prospective purchasers may compete for aircraft that meet their operational requirements. Yet tax policy is only one component of market activity. Interest rates, access to financing, corporate profitability, and the availability of suitable aircraft will continue to affect whether prospective buyers complete transactions.
The Deduction Does Not Eliminate Ownership Costs
A full first-year deduction can materially change a business aircraft’s after-tax economics, but it does not make the aircraft free. The purchaser must still fund the acquisition and cover recurring costs, including fuel, maintenance, insurance, hangar space, crew, training, and regulatory compliance. Financing expenses and the possibility of lower resale proceeds can further affect the investment’s overall return. Depreciation also concerns tax accounting rather than the aircraft’s actual market value. Deducting the purchase price does not mean that the aircraft has lost its entire economic value during the first year. Conversely, a large deduction cannot protect an owner against a decline in market prices or unexpected maintenance costs. Buyers should model the full ownership period instead of judging the transaction solely by the size of the first-year tax benefit.
Business use must remain documented after the initial acquisition. If an aircraft’s use changes, the taxpayer may need to reassess eligibility and could face depreciation recapture under applicable rules. Companies that mix business travel with personal use should maintain accurate flight logs, passenger records, trip purposes, and supporting documentation. These records help establish whether the claimed business use meets tax requirements.
Tax planning is also more complicated for aircraft used in charter operations, fractional ownership structures, or other arrangements involving multiple parties. The relevant rules can depend on ownership, operational control, lease terms, and how the aircraft generates income. A transaction that qualifies for one business may not produce the same result for another. Professional advice is therefore essential before treating the deduction as a central justification for a purchase.
Tax Policy Could Pull Aircraft Purchases Forward
The return of 100% bonus depreciation gives qualifying business aircraft buyers a stronger incentive to accelerate acquisitions, and industry forecasts and dealer reports suggest that the change is contributing to an already active market. Its longer-term influence will depend on whether the incentive generates genuinely additional purchases or mainly shifts planned transactions into earlier tax years.
That distinction will become clearer as 2026 delivery figures and pre-owned transaction data accumulate. If demand remains firm while manufacturers continue to face production constraints, buyers could encounter higher prices and longer waits even as the tax treatment becomes more favorable. Businesses that plan carefully, verify eligibility, and compare the full cost of ownership with the expected operational benefits will be better positioned to capture the deduction without allowing a tax deadline to dictate an uneconomic purchase.
