Federal Excise Tax
Both private and commercial business aircraft operators pay Federal excise taxes (FET) either on fuel or on the transportation of persons or property. In most cases, private operators (Part 91) are subject to the fuel tax on non-commercial aviation. Commercial operators (Part 135) are subject to the tax on transportation of persons or property.
For commercial transportation, FET takes the form of a percentage tax or a head tax, or both. The traditional FET is a percentage tax on the amount paid for commercial transportation. There is also a segment fee due on each domestic segment. Finally, a head tax also applies to international transportation of persons.
For non-commercial transportation, the fuel tax is a cents-per-gallon tax. There are different rates for both aviation gasoline and jet fuel. In most cases, this tax only applies to non-commercial transportation. When tax-paid fuel is used in commercial transportation, the ultimate purchaser can generally claim a refund less a small portion of the tax while it still applies.
It is important to note that the Internal Revenue Service (IRS) and Federal Aviation Administration (FAA) have different views on what constitutes commercial and non-commercial operations. In certain cases, an operation that is viewed as non-commercial by the FAA may actually be viewed as commercial by the IRS for FET purposes.
Effective January 1, 2010, the excise taxes due on commercial air transportation are:
Percentage Tax |
7.5% |
Domestic Segment Fee |
$3.70 |
International Arrival/Departure Head Tax |
$16.10 |
Hawaii/Alaska Flight Tax |
$8.10 |
For 2009, the excise taxes due on commercial air transportation were:
Percentage Tax |
7.5% |
Domestic Segment Fee |
$3.60 |
International Arrival/Departure Head Tax |
$16.10 |
Hawaii/Alaska Flight Tax |
$8.00 |
FET Resources
When are Commercial Transportation Taxes Due for Part 91 Flights?
Amendment to Tax Regulations Creates Federal Transportation Excise Tax Risks for Single Member LLCs
Federal Excise Taxes: The Regular Method Vs. the Alternative Method
Federal Excise Taxes: Deposit Safe Harbors and the Special September Deposit Rule
Aviation Fuel Taxes for Flight Departments: Understanding Fuel Taxes, Refunds and Credits
Fuel Fraud Update: Fuel Vendors Must Register With IRS to Ensure Funding of FAA Trust Fund
Credit for Fuel Used in Foreign Trade
Explanation of Non-Aircraft Use of Jet Fuel
Forms and Publications
IRS Revenue Procedure 2008-66: Air Transportation Taxes for 2009
IRS Publication 510 (Revised 2009)
IRS Air Transportation Excise Tax Audit Technique Guide
IRS Form 720 (Revised January 2009)
IRS Form 720 Instructions (Revised October 2009)
IRS Form 8849 with Instructions (Revised January 2009)
IRS Form 8849 Schedule 1 (Revised January 2009)
IRS Form 8849 Schedule 6 (Revised March 2008)
2009 Rural Airports List for Federal Excise Tax Purposes
Certificate of Person Buying Aviation-Grade Kerosene for Use as a Fuel in an Aircraft
IRS Technical Advice Memorandum 200122006: Federal Excise Tax Segment Fees
IRS Technical Advice Memorandum 200123002: Affiliated Group
