Can You Write Off a Private Jet as a Business Expense?

You can write off a private jet as a business expense when the aircraft is used primarily in a real trade or business, and under the One Big Beautiful Bill Act a qualifying jet placed in service after January 19, 2025, is eligible for 100% first-year bonus depreciation. In plain terms, the full purchase price can come off your taxable income in year one. The catch is that the IRS launched a dedicated compliance campaign in 2024 aimed at exactly these deductions, so the rules around business use, documentation, and personal-flight reporting have to be handled carefully.

What Counts as Business Use

Every aircraft deduction rests on the same threshold rule: the expense has to be “ordinary and necessary” in carrying on your trade or business under Section 162.¹ Ordinary means commonly accepted in your line of work. Necessary means helpful and appropriate for the business. A company with operations spread across states that don’t connect well by commercial airline has a straightforward case. A jet bought mostly to reach vacation homes does not.

Section 183, the hobby loss rule, sits on top of Section 162. If the IRS decides the activity is a hobby rather than a business, the losses can’t offset your salary or investment income.² The statute gives one useful benchmark: an activity that shows a profit in three of five consecutive years is presumed to be run for profit. That presumption shifts the burden to the IRS, though it doesn’t end the inquiry.

Business flights include client meetings, site inspections, equipment transport, and employee travel to secondary work locations. Personal flights include vacations, personal errands, and leisure trips. Two categories catch owners off guard. Commuting from your home to your main place of business is never deductible, whether by car or by jet.³ Entertainment flights are also out. Section 274 disallows deductions for activities generally considered entertainment, amusement, or recreation, so flying clients to a golf outing doesn’t qualify no matter how much business gets discussed in the air.⁴

Full First-Year Write-Off Under the OBBBA

The biggest benefit available to jet buyers right now is 100% bonus depreciation. The One Big Beautiful Bill Act amended Section 168(k) to make qualifying business property acquired and placed in service after January 19, 2025, eligible for a full first-year depreciation deduction.⁵ The entire cost of the aircraft can be deducted in the tax year it is first used for business.

This is a permanent change. The old Tax Cuts and Jobs Act phase-down, which had reduced bonus depreciation to 40% for 2025 and would have kept dropping, no longer applies to property acquired after January 19, 2025.⁶

To qualify, the aircraft must have a MACRS recovery period of 20 years or less. Noncommercial aircraft sit in the five-year class under the General Depreciation System, so they clear that threshold.⁷ Used aircraft qualify as long as the plane is new to you and meets the acquisition-date rule. The jet also has to satisfy the more-than-50% business use test.

For the first tax year ending after January 19, 2025, you can elect the old TCJA rate (60% for certain aircraft) instead of 100%.⁶ That election matters only in unusual planning situations where a full first-year deduction would be wasted against low income.

Section 179 as the Alternative

Section 179 offers a separate route to first-year expensing. For tax years beginning in 2025, the maximum Section 179 deduction is $2,500,000, and it begins phasing out dollar-for-dollar once total qualifying equipment purchases exceed $4,000,000.⁸ The limits are indexed for inflation each year.

Section 179 has a ceiling that bonus depreciation doesn’t: the deduction cannot exceed the taxable income from your active trade or business for the year.⁸ If your business nets $1 million and you buy a $5 million jet, the Section 179 deduction caps at $1 million. Unused amounts carry forward.

For most buyers in 2026, 100% bonus depreciation is the stronger tool. No income cap, no investment ceiling. Section 179 becomes useful when you want granular control over how much to expense in a given year, or when the aircraft was acquired before the OBBBA’s January 19, 2025, cutoff.

The 50% Business Use Threshold

Aircraft are “listed property” under the tax code, and listed property carries stricter rules than ordinary business equipment. Business use has to exceed 50% of total use to qualify for either bonus depreciation or Section 179. This is a hard cutoff. At 51% business use, the deduction is available (prorated to that 51%). At 50% or below, both accelerated methods disappear.

When business use falls to 50% or less, depreciation is limited to straight-line under the Alternative Depreciation System over a six-year recovery period.⁷ That’s a slow, evenly spread deduction rather than a first-year write-off.

The 50% test isn’t just a first-year gate. The IRS watches business use throughout the recovery period. If you claim 100% bonus depreciation in year one and business use later drops to 50% or below, recapture rules apply. You’ll owe tax on the difference between what you deducted and what the ADS method would have allowed. On a multimillion-dollar plane, the recapture bill can be substantial.

The Passive Activity Loss Trap

Clearing the 50% test doesn’t guarantee the deductions land where you want them. Section 469 treats an activity as “passive” unless you materially participate, and losses from passive activities can only offset passive income. They can’t reduce your wages, portfolio income, or profits from businesses where you are actively involved.⁹

Material participation means involvement that is regular, continuous, and substantial. The most straightforward of the Treasury regulations’ seven tests is logging more than 500 hours in the activity during the tax year.¹⁰ This trap catches owners who place the aircraft with a management company or charter operator and stay hands-off. Trapped passive losses aren’t lost forever; they suspend and release when you generate passive income or dispose of the activity. But the tax benefit can be deferred for years.

Records You Have to Keep

Substantiation rules for aircraft are among the strictest in the code. Section 274(d) requires records for every flight covering four things: the cost, the time and place, the business purpose, and the business relationship of each person on board.⁴ A contemporaneous flight log is the standard vehicle. Contemporaneous means recorded at or near the time of the flight, not reconstructed months later.

Each log entry should show the date, departure and destination airports, flight hours, passenger list, and a clear business reason. “Business meeting” is the kind of entry auditors zero in on. “Met with Johnson Controls procurement team re: Q3 supply contract” holds up.

Records supporting the business-use percentage have to be kept for every year of the recovery period, not just the first.⁸

Valuing Personal Flights with SIFL Rates

When an employee or other service provider takes a personal flight on the company aircraft, the value of that flight has to be reported as taxable fringe benefit income. Most employers use Standard Industry Fare Level rates published by the Department of Transportation, updated every six months. For the second half of 2025, the terminal charge is $54.48 per flight, and mileage rates are $0.2980 for the first 500 miles, $0.2272 for miles 501 through 1,500, and $0.2184 for miles beyond 1,500.¹¹

SIFL values are almost always far below the cost of a comparable charter flight, which is why employers use them. The calculation has to be done for every personal segment, and the resulting income has to show up on the passenger’s W-2 or equivalent form. Skipping this step exposes the business to penalties for underreporting fringe benefits.

How and When to File

Depreciation and expensing elections for the aircraft go on Form 4562 filed with your annual return.¹² Part V is the listed property section, where you enter total hours flown, business-use percentage, and the depreciation method and amount. Sole proprietors and single-member LLCs file Form 4562 with Form 1040. Corporations attach it to Form 1120. Partnerships and S corporations file it with their entity returns, and the deductions flow through on Schedule K-1.

Timing matters. Section 179 and bonus depreciation elections have to be made on the Form 4562 filed with your original return for the year the aircraft was placed in service, or on an amended return filed within six months of the original due date (excluding extensions).⁸ Miss that window and you may be locked into slower depreciation for the life of the aircraft.

Selling the Jet Later

Selling a depreciated aircraft triggers a tax event that offsets some of the earlier benefit. Under Section 1245, any gain on the sale up to the total depreciation you claimed is recaptured as ordinary income rather than taxed at capital gains rates.¹³ Buy a jet for $10 million, deduct $10 million, sell it later for $6 million: that entire $6 million is ordinary income.

The tax savings from bonus depreciation come early, and the recapture bill comes later, so there is a time-value advantage. But it needs to be planned for. The old escape route through a Section 1031 like-kind exchange is closed. The Tax Cuts and Jobs Act limited Section 1031 to real estate, so there is no longer any way to defer depreciation recapture when selling a business aircraft.¹⁴

The IRS Compliance Campaign

In February 2024, the IRS Large Business and International division launched a dedicated compliance campaign focused on business aircraft. It targets large corporations, large partnerships, and high-income individuals, with three focus areas: whether the aircraft qualifies for business use deductions, whether personal use is being properly tracked, and whether fringe benefit income is being correctly reported for personal-flight passengers.¹⁵

The campaign uses issue-based examinations. The IRS is looking specifically for aircraft red flags and drilling into them. An auditor working a dedicated aircraft file knows what to ask and what documents to demand. A vague flight log that might have survived a general audit will not survive a targeted one.

State Sales and Use Tax

Federal income tax is only part of the picture. Most states impose sales or use tax on aircraft purchases, with rates and exemptions varying widely. Some states exempt aircraft used primarily in interstate commerce, and many offer fly-away exemptions that waive sales tax when the buyer takes delivery and registers the plane in another state. These exemptions come with strict documentation and testing-period requirements, often demanding detailed flight logs for six to twelve months after purchase. State tax planning belongs before closing, not after; the swing between a state with a fly-away exemption and one without can run into six figures on a multimillion-dollar aircraft.

1
Office of the Law Revision Counsel. 26 USC 162 – Trade or Business Expenses
2
Office of the Law Revision Counsel. 26 USC 183 – Activities Not Engaged in for Profit
3
Internal Revenue Service. Topic No. 511, Business Travel Expenses
4
Office of the Law Revision Counsel. 26 USC 274 – Disallowance of Certain Entertainment, Etc., Expenses
5
Internal Revenue Service. One Big Beautiful Bill Provisions
6
Internal Revenue Service. Notice 2026-11, Interim Guidance on Additional First Year Depreciation Deduction Under Section 168(k)
7
Internal Revenue Service. Publication 946 – How to Depreciate Property
8
Internal Revenue Service. 2025 Instructions for Form 4562 – Depreciation and Amortization
9
Office of the Law Revision Counsel. 26 USC 469 – Passive Activity Losses and Credits Limited
10
eCFR. 26 CFR 1.469-5T – Material Participation (Temporary)
11
Department of Transportation. Standard Industry Fare Level Methodology – Attachment A
12
Internal Revenue Service. About Form 4562, Depreciation and Amortization (Including Information on Listed Property)
13
Office of the Law Revision Counsel. 26 USC 1245 – Gain From Dispositions of Certain Depreciable Property
14
Internal Revenue Service. Like-Kind Exchanges – Real Estate Tax Tips
15
Internal Revenue Service. IRS LBI Compliance Campaign – February 21, 2024