Federal Excise Tax on Air Transportation: Rates, Exemptions, and Filing

The federal excise tax on air transportation is a set of charges layered onto tickets and cargo bills: 7.5% of the fare for domestic passenger flights, a flat per-segment tax, a flat international facilities tax for flights that begin or end in the United States, and 6.25% of the amount paid to ship property by air. Carriers collect these taxes at the time of payment and remit them to the IRS, and the money funds air traffic control, airport construction, and FAA safety work through the Airport and Airway Trust Fund.¹

Passenger Flight Rates

The core tax on domestic air travel is 7.5% of what you pay for the ticket, applied to the base fare.² On top of that, a flat domestic segment tax hits each takeoff-and-landing pair in the itinerary. The statute pegs the base at $3.00 and adjusts it annually for inflation. For 2026, the segment tax is $5.30.³ A domestic itinerary with a connection carries two segments, so $10.60 in segment tax stacks on before the 7.5% is calculated.

International, Alaska, and Hawaii

Flights that begin or end in the United States pay an international facilities tax instead of the domestic per-segment charge. For 2026, that rate is $23.40 per passenger, and it also applies within the 225-mile buffer zone along the Canadian and Mexican borders.³ A lower rate of $11.70 applies to domestic segments beginning or ending in Alaska or Hawaii, charged on the departure only.⁴

Connections matter. If the scheduled gap between a domestic leg and an international leg is 12 hours or less, the domestic portion is treated as part of the international trip and escapes the 7.5% fare tax and per-segment charge.⁵ A layover longer than 12 hours breaks that treatment and the domestic leg is taxed separately.

The TSA Security Fee Is Separate

The Transportation Security Administration charges a $5.60 fee per one-way trip originating at a U.S. airport, capped at $11.20 round trip.⁶ It appears on tickets next to the excise taxes but is not part of the Airport and Airway Trust Fund and is not reported on Form 720.

Air Cargo

Shipping property by air carries a 6.25% excise tax on the amount paid for the transportation.⁷ It applies only when the payment goes to someone in the business of transporting property by air for hire; moving your own goods on your own aircraft does not trigger it. Domestic shipments and the domestic legs of international shipments are covered, and the same 12-hour uninterrupted-transportation rule decides whether a connecting domestic segment is taxed.

Who Collects and Remits

Federal law puts the collection duty on whoever receives the payment for the transportation, which in practice means the airline or carrier.⁸ If a ticket is purchased abroad, the carrier operating the first leg that begins or ends in the United States is on the hook for collection and reporting.⁹

Exemptions

Several categories of flights are exempt, and the details matter. Claiming an exemption that doesn’t fit creates a trust-fund liability that can attach to individual officers, while ignoring one that does fit means quarterly overpayment.

Small Aircraft on Non-Established Lines

Aircraft with a maximum certificated takeoff weight of 6,000 pounds or less are exempt from both the passenger and cargo taxes, but only if the aircraft is not operating on an established line and is not a jet.¹⁰ A light jet under 6,000 pounds still owes the tax.

Affiliated Corporate Groups

When one member of an affiliated corporate group owns or leases an aircraft and flies other members of the same group, no excise tax applies, provided the aircraft is not available for hire to anyone outside the group.¹¹ Once the aircraft becomes available outside the group, the exemption falls away for all flights, not just the outside ones.

Emergency Medical Flights

Air ambulance flights providing emergency medical services are exempt when operated by helicopter, or by a fixed-wing aircraft that is equipped for and exclusively dedicated on that flight to acute care emergency medical services.² A fixed-wing aircraft carrying paying passengers on the same flight would not qualify.

Skydiving

Air transportation used exclusively for skydiving is exempt from both the passenger and cargo taxes.² “Exclusively” does the work here. A scenic flight offering skydiving as an option would have to separate the taxable and nontaxable portions.

Rural Airport Segments

The domestic segment tax does not apply to any segment that begins or ends at a rural airport. An airport qualifies for a given calendar year if it had fewer than 100,000 commercial departing passengers two years earlier and meets one of several geographic or subsidy conditions, such as being more than 75 miles from a larger airport or receiving essential air service subsidies.² The 7.5% fare tax still applies; only the per-segment charge is waived.

Aircraft Management Services

Aircraft owners who pay a management company for scheduling, maintenance, crew, insurance, fueling, storage, and similar operational support do not owe excise tax on those payments.² The exemption does not cover the fare charged when the owner is paying for transportation itself.

Fractional Ownership Programs

Participants in a fractional ownership program pay a fuel surtax of 14.1 cents per gallon on fuel used in program aircraft, in place of the 7.5% fare tax and segment charges.¹² The surtax runs through September 30, 2028, and covers flights for qualified fractional owners, including deadhead repositioning legs.

Reporting on Form 720

Collecting parties report these taxes on IRS Form 720, the Quarterly Federal Excise Tax Return.¹³ Aviation taxes sit under three IRS numbers in Part I:¹⁴

IRS No. 26, transportation of persons by air. This single line combines the 7.5% fare tax and the domestic segment tax.⁴
IRS No. 27, use of international air travel facilities, covering the $23.40 per-passenger charge or the $11.70 Alaska/Hawaii departure rate.
IRS No. 28, transportation of property by air, for the 6.25% cargo tax.

Credits and adjustments go on Schedule C, including credits for aviation fuel taxes already paid when the fuel was used for a nontaxable purpose. Schedule C claims must total at least $750, and only one claim per quarter is allowed.¹⁵ Keep supporting records for at least four years from the latest of the date the tax was due, the date it was paid, or the date the claim was filed.

Deposit Schedule and Filing Deadlines

Quarterly returns are due by the last day of the month following each calendar quarter: April 30, July 31, October 31, and January 31.⁴ You cannot wait until the quarterly deadline to pay. Regulations require semi-monthly deposits throughout the quarter.¹⁶

Each month splits into two deposit periods: the 1st through the 15th, and the 16th through the end of the month. At least 95% of the net tax liability for each semi-monthly period must be deposited by the 14th day of the following semi-monthly period. A safe harbor lets you base deposits on one-sixth of the liability from the same quarter two quarters earlier, as long as deposits are timely and any remaining balance is paid by the return due date.¹⁶ Most filers deposit through the Electronic Federal Tax Payment System.¹⁷

Penalties for Late Deposits and Nonpayment

Missing a deposit deadline triggers escalating penalties based on how late the deposit is:¹⁸

1 to 5 days late: 2% of the underpaid amount
6 to 15 days late: 5%
More than 15 days late: 10%
After a delinquency notice or demand for immediate payment: 15%

Penalties apply per semi-monthly period, so a missed deposit in one period does not contaminate the rest of the quarter. Interest accrues on unpaid balances from the due date forward.

The larger exposure is personal. Because air transportation excise taxes are trust fund taxes collected from passengers and shippers, officers and employees responsible for paying them over to the IRS can be held personally liable for the full amount if they willfully fail to do so.¹⁹ “Willfully” here does not require intent to defraud; knowingly using the collected tax to cover other business expenses instead of remitting it can satisfy the standard. The penalty equals 100% of the unpaid tax, and the IRS can assess it against several responsible individuals at once.

Ticket and Advertising Disclosure

Airlines and ticket sellers face separate penalties for how these taxes appear on tickets and in advertising. A ticket for taxable air transportation must show the total of the fare and the taxes together. Advertisements stating a price for air travel must also state the total, including taxes, at least as prominently as either the fare or tax amount when those are shown separately.²⁰

When taxes are broken out separately, the disclosure must describe them substantially as “user taxes to pay for airport construction and airway safety and operations.” Lumping non-tax charges such as carrier-imposed fees into the tax line is prohibited. A violation is a misdemeanor carrying a fine of up to $100 per instance, which scales quickly across a ticket inventory.²⁰

1
Federal Aviation Administration. Airport and Airway Trust Fund (AATF)
2
Office of the Law Revision Counsel. 26 USC 4261 – Imposition of Tax
3
Federal Aviation Administration. Trust Fund Excise Taxes Structure
4
Internal Revenue Service. Instructions for Form 720 (Rev. 03-2026)
5
Office of the Law Revision Counsel. 26 USC 4262 – Definition of Taxable Transportation
6
Transportation Security Administration. Security Fees
7
Office of the Law Revision Counsel. 26 USC 4271 – Imposition of Tax
8
Office of the Law Revision Counsel. 26 USC 4291 – Cases Where Persons Receiving Payment Must Collect Tax
9
Office of the Law Revision Counsel. 26 USC 4263 – Special Rules
10
Office of the Law Revision Counsel. 26 USC 4281 – Small Aircraft on Nonestablished Lines
11
Office of the Law Revision Counsel. 26 USC 4282 – Transportation by Air for Other Members of Affiliated Group
12
Office of the Law Revision Counsel. 26 USC 4043 – Surtax on Fuel Used in Aircraft Part of a Fractional Ownership Program
13
Internal Revenue Service. About Form 720, Quarterly Federal Excise Tax Return
14
Internal Revenue Service. Form 720 – Quarterly Federal Excise Tax Return
15
Internal Revenue Service. Instructions for Form 720
16
eCFR. 26 CFR 40.6302(c)-1 – Deposits
17
Internal Revenue Service. EFTPS The Electronic Federal Tax Payment System
18
Office of the Law Revision Counsel. 26 USC 6656 – Failure to Make Deposit of Taxes
19
Office of the Law Revision Counsel. 26 USC 6672 – Failure to Collect and Pay Over Tax, or Attempt to Evade or Defeat Tax
20
Office of the Law Revision Counsel. 26 USC 7275 – Penalty for Offenses Relating to Certain Airline Tickets and Advertising