Washington, DC, Dec. 20, 2017 – The National Business Aviation Association (NBAA) today hailed final congressional passage of the Tax Cuts and Jobs Act, which includes provisions NBAA has long championed on behalf of general aviation. The bill now goes to the president for signing, which is expected shortly.
“The tax legislation passed by Congress today includes key provisions that NBAA has advocated for and will directly lead to growth for the general aviation industry,” said NBAA President and CEO Ed Bolen. “Provisions in the bill, such as immediate expensing, are key economic drivers for the general aviation industry, which supports 1.1 million jobs.”
One major victory for the general aviation industry and other manufacturing businesses is the immediate expensing of new and used equipment. Through the efforts of NBAA and a coalition of general aviation groups, the new law permits 100-percent immediate expensing by the taxpayer for both factory-new and pre-owned aircraft, so long as it is the taxpayer’s first use of the aircraft. This represents the first time that immediate expensing has ever been applied to used equipment.
Under the legislation, in the years after 2022, there will be a phasedown of bonus depreciation in increments of 20 percent each year for qualified aircraft acquired and placed in service before Jan. 1, 2027.
NBAA thanks Rep. Todd Rokita (R-4-IN) and Sens. Pat Roberts (R-KS), Jerry Moran (R-KS) and Jim Inhofe (R-OK) for their significant efforts to secure immediate expensing of used equipment.
One drawback of the legislation is the repeal of “like-kind” exchanges for business property, under which businesses could defer taxes on sales of equipment if they were purchasing new equipment. Working through a broad coalition, NBAA plans to seek an extension of immediate expensing and the reinstatement of like-kind exchanges of business equipment.
Another significant victory for the general aviation industry in the tax legislation is the resolution of a dispute over airline ticket taxes improperly imposed on aircraft management fees. Under the legislation, business aircraft owners that hire a management company to provide support services will pay the non-commercial aviation fuel tax, as is specified in current law, and not the 7.5 percent Federal Transportation Excise Tax ticket tax.
“For many years aircraft management companies were on the brink of closing their doors because of the improper and retroactive application of commercial airline ticket taxes,” said NBAA Senior Director of Government Affairs Scott O’Brien. “With tax reform, these small businesses now have certainty as to their obligations. We are grateful for the leadership of Ohio Sens. Rob Portman (R) and Sherrod Brown (D), as well as Rep. Pat Tiberi (R-12-OH) on this critical issue.”