Airport and Airway Trust Fund: Revenues, Uses, and Balance

The Airport and Airway Trust Fund is the federal account that collects aviation excise taxes from airline passengers, shippers, and fuel buyers and spends that money on the FAA’s operations, air traffic control equipment, and airport construction grants. It took in roughly $23.1 billion in fiscal year 2024 and held a cash balance of $21.8 billion at the close of FY 2025.¹ Congress created it in 1970, and today it covers about 93% of the FAA’s roughly $21 billion annual budget, with the rest coming from the general Treasury.²

Where the Money Comes From

The revenue sources are set out in 26 U.S.C. § 9502. Airlines and other sellers collect the taxes at the point of sale and remit them to the IRS, which credits them to the fund.³

Ticket and Passenger Taxes

The largest single source is a 7.5% tax on the base fare of every domestic airline ticket.⁴ Each flight segment on a domestic itinerary also carries a flat charge, set at $5.30 per segment for calendar year 2026. International trips beginning or ending in the United States are taxed at $23.40 per passenger instead of the percentage-and-segment combination, and flights to or from Alaska and Hawaii use a separate $11.70 per-departure charge.⁵ These dollar figures adjust annually for inflation from a 1998 base.

Passenger transportation taxes made up about 69% of FY 2024 excise collections; the international per-passenger tax added another 24%.² Because so much of the fund rides on ticket sales, its revenue tracks passenger volume closely, which is why the COVID-era travel collapse hit it hard.

Cargo Tax

Domestic air freight is taxed at 6.25% of the amount paid for transportation.⁶ Cargo taxes contributed roughly 2.8% of FY 2024 receipts.

Aviation Fuel Taxes

Fuel taxes vary by who is burning the fuel. Airlines and other registered commercial operators pay 4.3 cents per gallon on jet fuel.⁷ Noncommercial jet fuel, covering corporate jets and private use, is taxed at 21.8 cents per gallon.⁸ Aviation gasoline for piston-engine general aviation aircraft is 19.3 cents per gallon. Fuel used by aircraft in fractional ownership programs carries an additional 14.1 cents per gallon surtax.⁹

The gap between the 4.3-cent commercial rate and the 21.8-cent noncommercial rate reflects that airline passengers already pay ticket and segment taxes; without a higher fuel rate, private and general aviation would put almost nothing into the system. All fuel taxes combined still accounted for less than 4% of FY 2024 trust fund receipts.²

What the Fund Pays For

Trust fund spending divides into four main categories, plus a smaller related program.

FAA Operations

This is the largest single draw. It covers air traffic controllers, safety inspectors, facility maintenance, and the administrative cost of running the agency. Operations is also the category that receives the General Fund supplement, so that keeping planes safely separated does not depend on aviation tax collections alone.

Facilities and Equipment

The Facilities and Equipment account funds the hardware and software of air traffic control: radar, communications networks, tower automation, and the shift to satellite-based navigation under the Next Generation Air Transportation System. The FAA originally aimed at 2025 for major NextGen milestones, but several programs have slipped past 2030, and the total cost estimate has grown to about $20.6 billion.

Airport Improvement Program

AIP grants go to public airports for planning and physical development projects listed in the National Plan of Integrated Airport Systems, including runways, taxiways, safety lighting, and noise mitigation.¹⁰ Congress authorized $4 billion for AIP in FY 2026 under the most recent reauthorization.¹¹ Commercial airports get the bulk of the grants, but smaller general aviation fields are eligible too.

Research, Engineering, and Development

A smaller share funds long-horizon work on aviation safety and environmental impact, including human-factors research, weather forecasting, and cleaner engine technology.

Essential Air Service

EAS subsidizes commercial flights to small communities that would otherwise lose airline service. It is paid for through overflight fees collected from foreign aircraft transiting U.S.-controlled airspace rather than from the excise taxes above. The FAA advances the money from its Facilities and Equipment account and is later reimbursed as fees come in. Congress set EAS funding at roughly $167 million for FY 2026.¹²

What Is Not in the Fund

Two common sources of confusion. The Passenger Facility Charge on your ticket, capped at $4.50 per segment and $18 per round trip, does not go into the trust fund. PFCs are collected by airlines for the specific airport where you board and pay for local terminal and gate projects.¹³ Proposals to raise the PFC cap are a separate policy fight from trust fund excise tax rates.

The General Fund supplement is also separate. It contributed roughly $1.4 billion to the FAA in FY 2025, about 7% of the agency’s budget.² The share has swung widely over time, exceeding 80% in parts of the 1970s and briefly hitting zero around 2000. The usual rationale for keeping some General Fund contribution is that military aircraft use the air traffic system without paying excise taxes and that safe aviation benefits people who never fly.

How Congress Releases the Money

Revenue in the trust fund cannot be spent just because it is there. Two separate legislative steps have to happen.

First, an authorization bill has to establish the legal framework for FAA programs and set multi-year spending ceilings. The current one is the FAA Reauthorization Act of 2024, Public Law 118-63, signed on May 16, 2024, and covering programs through fiscal year 2028.¹⁴ Authorization by itself does not release any cash; it only tells the FAA what it is allowed to plan for.

Second, annual appropriations bills approve specific dollar amounts to be drawn from the Treasury. The trust fund functions as a ledger within the Treasury, tracking how much tax revenue has come in against how much has been committed. Federal law separately bars any government employee from spending money or signing a contract before an appropriation exists to cover it.¹⁵

What Happens if Authorization Lapses

If Congress lets authorization expire without a replacement or extension, two things break at once: the legal authority to collect the excise taxes disappears, and the FAA loses its ability to spend trust fund revenue. Air traffic control keeps running on the General Fund side of the budget under continuing appropriations, but the fund essentially stops taking in money. Authorization lapses in 1996 and 1997 cost an estimated $5 billion in forgone taxes. A two-week lapse in mid-2011 drained about $400 million, roughly $200 million per week, before Congress passed the Airport and Airway Extension Act of 2011 to reinstate the taxes retroactively.

The next potential lapse point under current law is October 2028, when the authorization in Public Law 118-63 expires.³

The Balance in Context

The $21.8 billion cash balance at the end of FY 2025 overstates how much money is actually free to spend. A large share is already committed to grants and contracts that have not yet been paid out. The uncommitted balance, which subtracts those obligations, is the figure policymakers watch to judge the fund’s real health. When it drops too low, it usually means either that revenue is lagging or that commitments have outrun collections, and that is typically what draws Congress back to tax rates or spending limits.

1
Federal Aviation Administration. Airport and Airway Trust Fund (AATF)
2
Federal Aviation Administration. Airport and Airway Trust Fund (AATF) Fact Sheet
3
Office of the Law Revision Counsel. 26 USC 9502 – Airport and Airway Trust Fund
4
Office of the Law Revision Counsel. 26 USC 4261 – Imposition of Tax
5
Internal Revenue Service. Instructions for Form 720 (Rev. March 2026)
6
Office of the Law Revision Counsel. 26 U.S. Code 4271 – Imposition of Tax
7
Office of the Law Revision Counsel. 26 USC 4081 – Imposition of Tax
8
Office of the Law Revision Counsel. 26 U.S. Code 4041 – Imposition of Tax
9
Office of the Law Revision Counsel. 26 U.S. Code 4043 – Surtax on Fuel Used in Aircraft Part of a Fractional Ownership Program
10
Federal Aviation Administration. Airport Improvement Program (AIP) Overview
11
Office of the Law Revision Counsel. 49 USC 48103 – Airport Planning and Development and Noise Compatibility Planning and Programs
12
U.S. Department of Transportation. Federal Aviation Administration FY 2027 President’s Budget Submission
13
Federal Aviation Administration. Passenger Facility Charge (PFC) Program
14
Congress.gov. H.R. 3935 – FAA Reauthorization Act of 2024
15
Office of the Law Revision Counsel. 31 USC 1341 – Limitations on Expending and Obligating Amounts