How Bonus Depreciation Is Reshaping the Private Aircraft Market
What Is Bonus Depreciation?
- It’s a tax incentive that allows businesses to immediately deduct (in year one) a large portion or all of the cost of qualifying capital assets (like aircraft), rather than spreading depreciation over many years.
- Historically, bonus depreciation has fluctuated in size (e.g. 30 %, 50 %) depending on legislation.
- In the U.S., through the One Big Beautiful Bill Act, 100 % bonus depreciation has been permanently reinstated for business assets (including aircraft) beginning 2025, reversing a previously scheduled phase-out.
Key Impacts on the Private Aircraft Market
Spike in Aircraft Transactions
- With full write-off in year one, buyers are more incentivized to purchase. This has especially boosted demand for pre-owned jets, as the tax benefit now extends to used aircraft (in many cases)
Greater Market Participation
- The tax advantage makes aircraft acquisition more attractive to a broader set of entities: corporate buyers, smaller businesses, and high-net-worth individuals seeking more efficient capital deployment.
Effect on Charter / Leasing / Charter Operators
- More aircraft entering charter fleets (Part 135 operations) helps owners meet “business-use” thresholds.
- Increased fleet supply can benefit jet card / charter consumers more options, possibly more competitive pricing.
Ancillary Industries Benefit
More sales drive growth in related sectors:
- Aircraft financing and acquisition firms
- Maintenance, repair, and overhaul (MRO)
- Aircraft management services
- Appraisers, brokers, and legal / tax consulting services
Valuations, Pricing & Market Dynamics
Some caution is warranted:
- While demand may tighten inventory and push up values, historical evidence suggests normal depreciation trends often still prevail.
- High interest rates, macroeconomic uncertainty, and liquidity constraints may moderate how aggressively buyers act.
- Strong documentation, tracking, and compliance with IRS rules will be critical (especially to avoid depreciation recapture).