Aircraft Depreciation Life: IRS Rules and MACRS Periods

Business aircraft have a depreciation life of five years under the IRS’s default General Depreciation System, or seven years if the aircraft is used in scheduled commercial airline service.¹ Those recovery periods still govern the annual math, but for aircraft acquired after January 19, 2025, they matter far less in practice: 100% bonus depreciation is now permanently available, so the full adjusted basis of a qualifying aircraft can be deducted in the year it’s placed in service.² The five- or seven-year life still controls what you deduct each year if you elect out of bonus depreciation, if the aircraft fails the business-use tests, or if your usage drops later and triggers recapture.

Noncommercial or Commercial: The Split That Sets the Life

Everything starts with how the aircraft is used. Noncommercial aircraft covers the large majority of business planes: corporate jets, turboprops, helicopters, and fractional shares operated under FAA Part 91. Commercial aircraft means airframes and engines used by certified air carriers for scheduled passenger or cargo service, generally operating under FAA Part 135 or Part 121.

A Part 91 corporate aircraft falls into the five-year class. A Part 135 charter or Part 121 airline aircraft falls into the seven-year class.¹ Getting this wrong at the start means filing incorrect returns for the entire life of the asset, so confirm the classification with a tax professional before you report a single dollar.

The Five- and Seven-Year GDS Schedules

The Modified Accelerated Cost Recovery System is the required framework for nearly all business property placed in service after 1986.¹ Its default track is the General Depreciation System.

Under GDS, noncommercial aircraft use a five-year recovery period with the 200% declining balance method, which front-loads deductions into the earlier years. Commercial aircraft used in scheduled airline service use a seven-year recovery period, also on 200% declining balance.¹ The half-year convention treats the aircraft as placed in service at the midpoint of the year, which spreads a five-year asset’s deductions across six calendar years.

One timing trap catches late-year buyers. If more than 40% of all your depreciable property placed in service during the tax year goes into service in the last three months, the IRS applies a mid-quarter convention instead. That shifts the deemed start date to the midpoint of the acquisition quarter and reduces your first-year deduction when the purchase closes in October, November, or December.

The Longer ADS Life and When You’re Stuck With It

The Alternative Depreciation System stretches the life and switches to straight line. For noncommercial aircraft the ADS recovery period is six years. For commercial aircraft it runs twelve years.¹

ADS is mandatory when the aircraft is used predominantly outside the United States, financed with tax-exempt bonds, or fails the more-than-50% business-use test discussed below. You can also elect into ADS voluntarily. Some owners do that for earnings-management reasons or because their state tax code doesn’t conform to federal accelerated depreciation. The election is irrevocable for that asset.

When the Depreciation Clock Actually Starts

Depreciation begins when the aircraft is “placed in service,” meaning ready and available for its intended use. A factory-new jet delivered to your hangar and cleared to fly is placed in service on the delivery date, even if the first business flight doesn’t happen for two weeks.¹

Custom modifications can push the date back. Buy a used aircraft in September and send it straight to a shop for a three-month avionics overhaul, and the plane isn’t ready for its intended use until the work is done. The placed-in-service date is when the shop releases it and you accept delivery, not the date on the purchase agreement. For a major acquisition near year-end, a December versus January placed-in-service date can shift an entire year of depreciation.

Converting a personally owned aircraft to business use? The placed-in-service date is the conversion date, and your depreciable basis is the lesser of fair market value on that date or your adjusted cost basis.

Why the Five-Year Life Rarely Runs Its Course Now

The One, Big, Beautiful Bill, signed into law in 2025, permanently restored 100% first-year bonus depreciation for qualified property acquired after January 19, 2025.² For aircraft placed in service in 2026 or later, the full adjusted basis is deductible in year one. This covers both new and used aircraft, provided the used aircraft is acquired from an unrelated party and wasn’t previously used by the taxpayer.³

Under the earlier Tax Cuts and Jobs Act phase-down, the bonus rate had dropped to 40% for 2025 before the OBBB intervened. The law now provides a permanent 100% rate with no scheduled expiration. Bonus depreciation has no dollar cap and no taxable-income limitation, so a deduction that exceeds current-year income can create or increase a net operating loss to carry forward. The aircraft must have a MACRS recovery period of 20 years or less to qualify, which every standard aircraft class satisfies.³

Owners can elect out of bonus depreciation for any class of property. That sometimes makes sense when current-year income is unusually low, when a state has decoupled from federal bonus rules, or when spreading deductions over the five- or seven-year MACRS life produces a better long-term result. Elect out, and the aircraft depreciates on its normal recovery schedule.

Section 179 as a Secondary Lever

Section 179 lets you expense qualifying business property in the year it’s placed in service, up to an annual dollar limit. The OBBB raised the base deduction to $2,500,000 with a phase-out beginning at $4,000,000 in total equipment purchases, both indexed for inflation. For the 2026 tax year, the deduction limit is approximately $2,560,000 and the phase-out threshold is approximately $4,090,000.

Section 179 differs from bonus depreciation in two ways that matter. It cannot create a net operating loss; the deduction is capped at your taxable income from the active conduct of a trade or business, with any excess carrying forward. And the aircraft must be used more than 50% for qualified business purposes to be eligible at all.¹

When both provisions apply, Section 179 is applied first, reducing the basis before the bonus percentage runs on the remainder. With permanent 100% bonus depreciation available, Section 179 matters less for aircraft than it did a few years ago. The main remaining edge shows up on state returns in states that conform to Section 179 but have decoupled from federal bonus depreciation. All depreciation is reported on Form 4562.⁴

The 50% Business Use Rule That Can Force ADS

Aircraft are classified as “listed property,” a category that triggers stricter recordkeeping and usage requirements than ordinary business assets.⁵ The central rule: the aircraft must be used more than 50% for qualified business purposes during the tax year to qualify for accelerated depreciation, bonus depreciation, or Section 179.

Fail the 50% test in the placed-in-service year and you’re locked into straight-line depreciation over the ADS recovery period from day one — six years for noncommercial aircraft, twelve for commercial. No bonus depreciation, no Section 179, no accelerated method.⁶

If business use started above 50% but drops to 50% or below in a later year, you face depreciation recapture. You must add back to ordinary income the difference between the accelerated depreciation previously claimed and what ADS straight line would have produced.⁵ From that point forward, you switch to ADS for all remaining depreciation on the aircraft. Owners who took 100% bonus depreciation in year one face the largest recapture exposure, since the entire accelerated amount can be clawed back.

Regardless of whether you clear the 50% bar, the actual deduction is always limited to the business-use percentage. An aircraft used 70% for business and 30% for personal flights generates depreciation equal to 70% of the calculated MACRS amount. The IRS requires contemporaneous flight logs showing the date, route, passengers, and business purpose of each trip — maintained during the year, not reconstructed at tax time. Without adequate documentation, the IRS can disallow the entire depreciation deduction.⁵

The 25% Test Aircraft Owners Miss

Aircraft face a second business-use test that doesn’t apply to cars or other listed property. Under Section 280F, certain flights that would otherwise count as qualified business use are excluded when they involve a 5% owner, a related person, or an employee receiving the flight as compensation without proper income reporting. Specifically, flights leased to a 5% owner, provided as compensation to a 5% owner or related person, or provided to any employee without including the value in gross income do not count.⁷

Aircraft get a safe harbor from that exclusion, but only if at least 25% of the plane’s total use during the year consists of qualified business flights that don’t fall into any of those excluded categories. At least a quarter of your total flight hours must be straightforward business trips.⁷

Pass the 25% test, and the excluded-category flights get added back into your qualified business use percentage for purposes of the 50% threshold. Fail it, and those flights are stripped out, potentially dropping your qualified business use below 50% and forcing you into ADS with recapture on any accelerated deductions already claimed. Owner-heavy flight operations run into this most often. A corporate jet that flies the CEO almost exclusively, with only occasional non-owner employee business trips, can fail the 25% test even when every flight has a legitimate business purpose.

Recapture When You Sell

Every dollar of depreciation you’ve claimed comes back into play at sale. Under Section 1245, gain on the sale is treated as ordinary income to the extent of all depreciation previously deducted.⁸ Only the portion of gain that exceeds total depreciation is taxed at the lower capital gains rate.

The hit is largest when an owner claimed 100% bonus depreciation in year one. Buy a $10 million jet, write off the full amount, sell four years later for $6 million, and the entire $6 million gain is ordinary income because the adjusted basis is zero. Ordinary income rates can be nearly double the long-term capital gains rate. Aircraft no longer qualify for Section 1031 like-kind exchange treatment after the Tax Cuts and Jobs Act limited that provision to real property, so the classic deferral tool is off the table.

The recapture calculation uses the “recomputed basis,” meaning your adjusted basis plus all depreciation deductions previously allowed or allowable.⁸ The word “allowable” matters: recapture is based on what you could have deducted, even if you skipped the deduction. Not claiming depreciation doesn’t shield you.

Two Rules That Can Suspend the Deduction Entirely

Even the correct recovery period doesn’t help if a separate rule blocks the loss from being used.

If you own an aircraft used in a trade or business but don’t materially participate, your depreciation deductions are passive losses. Passive losses can only offset passive income, not wages, investment returns, or income from businesses where you do materially participate.⁹ This commonly catches investors who buy into an aircraft charter operation expecting the depreciation to shelter other income. Unless you meet a material participation test, the deductions sit suspended until you generate passive income or dispose of the activity.

If the IRS determines the aircraft activity isn’t genuinely conducted for profit, Section 183 reclassifies it as a hobby. You report all gross income from the activity but lose virtually all deductions, including depreciation. The IRS looks at whether you keep proper books, have a business plan, seek expert advice, and have a history of profits. Aircraft charter and leasing operations that consistently lose money are frequent targets.

Quick Reference: Aircraft Depreciation Periods

1
Internal Revenue Service. Publication 946 (2025), How To Depreciate Property
2
Internal Revenue Service. Treasury, IRS Issue Guidance on the Additional First Year Depreciation Deduction Amended as Part of the One, Big, Beautiful Bill
3
Office of the Law Revision Counsel. 26 U.S. Code 168 – Accelerated Cost Recovery System
4
Internal Revenue Service. About Form 4562, Depreciation and Amortization (Including Information on Listed Property)
5
Internal Revenue Service. Publication 946 (2025), How To Depreciate Property – Section: Additional Rules for Listed Property
6
Internal Revenue Service. 2025 Instructions for Form 4562 – Depreciation and Amortization (Including Information on Listed Property) – Section: Listed Property
7
Office of the Law Revision Counsel. 26 U.S. Code 280F – Limitation on Depreciation for Luxury Automobiles and Other Listed Property
8
Office of the Law Revision Counsel. 26 U.S. Code 1245 – Gain From Dispositions of Certain Depreciable Property
9
Office of the Law Revision Counsel. 26 U.S. Code 469 – Passive Activity Losses and Credits Limited
10
Internal Revenue Service. 2025 Instructions for Form 4562 – Depreciation and Amortization (Including Information on Listed Property)