Feb. 27, 2020

A bill recently introduced in the U.S. Senate could make an important tax depreciation rule that has stimulated the sale of new and used business aircraft a permanent part of the tax code.

Under the 2017 Tax Cuts and Jobs Act, eligible taxpayers can now
deduct 100% of the cost for qualifying new or used aircraft or fractional shares in the first year of ownership. This provision – known as immediate expensing or bonus depreciation – however, is only available to taxpayers until the end of 2022 when the available immediate deduction begins to phase-down.

That could change, though, with the introduction of the Accelerated Long-Term Investment Growth Now Act by Sen. Pat Toomey (R-PA), which would make full expensing permanent.

“Tax reform’s most pro-growth feature was allowing businesses to immediately write off purchases of new equipment. It led to workers becoming more productive, which resulted in higher wages and more jobs,” Toomey said in a statement. “My bill to make full expensing permanent would give manufacturers and businesses of all sizes certainty around investment planning and it would keep our economy humming. I thank my cosponsors for recognizing the economic benefits of full expensing and look forward to getting this measure passed and signed into law.”

The ability to fully expense an aircraft purchase has been positive for the business aviation community, said Keith Swirsky, president of GKG Law and chairman of the firm’s Business Aviation Group and Tax Group. “The benefits of immediate or full expensing are compelling, and this tax provision certainly has incentivized people to purchase an aircraft who otherwise would not have made that purchase or might have stayed with fractional ownership,” he said.

“We applaud Sen. Toomey for the ALIGN Act, as we have witnessed the benefits of the immediate expensing provisions first-hand. Tools that promote aircraft sales equate to more aerospace jobs and economic benefits for the community and for the country,” said Stephen Friedrich, chief commercial officer, Embraer Executive Jets. “Business Jets are productivity machines, and tax incentives, such as those outlined in the ALIGN Act, make for a more vibrant economy.”

“NBAA is a strong supporter of immediate expensing, and we applaud Sen. Toomey’s leadership in introducing this vital piece of legislation which would grow our industry and generate new jobs,” added Scott O’Brien, NBAA senior director, government affairs. “Full expensing simplifies the tax code and stimulates the general aviation industry which contributes $219 billion in economic activity in the United States and supports high-skill, high-paying jobs for more than 1.1 million Americans.”

Learn more about the benefits of full expensing.