Aircraft bonus depreciation is back at 100%, and this time it is permanent. The One Big Beautiful Bill Act, signed on July 4, 2025, restored full first-year bonus depreciation for qualifying property and removed the phase-down that had been cutting the benefit each year. For aircraft buyers, that means the full cost of a qualifying new or pre-owned aircraft can potentially be deducted in the year it is placed in service, rather than spread out over several years.

Because the rule no longer expires, it is easy to assume there is no deadline to worry about. There is still one that matters for calendar-year taxpayers planning around the 2026 tax year: the aircraft has to be placed in service by December 31. Businesses that use a different fiscal year have a different cutoff, the last day of their own tax year. With roughly eleven weeks left in the year, here is how the rule works and why the calendar is worth watching.

What Changed

The 2017 Tax Cuts and Jobs Act introduced 100% bonus depreciation, but it was built to phase down. The rate dropped to 80% for property placed in service in 2023 and to 60% in 2024, and it was scheduled to keep stepping down from there.

The One Big Beautiful Bill Act reversed that schedule. For qualifying property acquired after January 19, 2025, bonus depreciation returns to 100%, and the Act does not include a sunset date. In practical terms, the full deduction is now a standing feature of the tax code rather than a shrinking, temporary incentive.

The market has noticed. The International Aircraft Dealers Association reported that pre-owned business jet transactions rose 21% in the first half of 2026 compared with the same period in 2025, and IADA listed permanent 100% bonus depreciation among the factors behind that increase.

What Qualifies

A few conditions determine whether an aircraft purchase is eligible for the full deduction:

  • New and pre-owned aircraft both qualify. A used aircraft can be eligible as long as the buyer has not previously used it.
  • The acquisition date matters. The aircraft must have been acquired after January 19, 2025. Aircraft under a binding purchase contract signed before that date fall under the older phase-down rules.
  • Business use must exceed 50%. Aircraft are treated as “listed property,” which means qualified business use has to be more than 50% of total use in the year the aircraft is placed in service. If it falls short, bonus depreciation is not available and the aircraft drops to a slower straight-line schedule.
  • Some uses only count under a sub-test. Certain uses, such as leasing the aircraft to a related party, count toward the 50% threshold only if other qualified business use is at least 25% of total use.
  • Personal and entertainment use reduce the benefit. The deductible amount generally tracks the business-use percentage, and flights for personal or entertainment purposes can limit what is deductible.

Why December 31 Still Matters

Permanence removes the pressure of a disappearing benefit. It does not change how the deduction is timed. Bonus depreciation is claimed in the tax year the aircraft is placed in service, which generally means the aircraft has been delivered and is ready and available for its intended use.

That distinction is easy to miss:

  • Signing a purchase agreement in November does not, by itself, place the aircraft in service.
  • Paying a deposit does not place the aircraft in service.
  • For a calendar-year taxpayer, an aircraft that closes on January 4 belongs to the following tax year, even if every other step happened in December.

For a calendar-year taxpayer who wants the deduction on a 2026 return, the aircraft needs to close, deliver, and be put into use before the year ends. Anything that slips past December 31 moves the deduction into 2027. For a business on a fiscal year, the same rule applies to the last day of its fiscal year instead.

How Much Time a Year-End Purchase Needs

A pre-owned aircraft transaction has several stages, and each one takes time:

  • Search and selection. Identifying aircraft that fit the mission, budget, and specification.
  • Letter of intent and purchase agreement. Negotiating terms and placing a deposit in escrow.
  • Pre-purchase inspection. Often one to several weeks depending on the aircraft, the inspection scope, and shop availability.
  • Discrepancy resolution. Agreeing on how items found during the inspection will be handled.
  • Closing and delivery. Funding, title transfer, registration, and delivery to the buyer.

Inventory is also tight. Only about 6.5% of the business jet fleet was listed for sale at the end of the second quarter of 2026, according to Amstat, well below historical norms. Fewer available aircraft can mean more time spent finding the right one. Starting in mid-October leaves room for that process. Starting in mid-December leaves very little.

What Else Buyers Should Know

A few other factors can affect how much of the deduction a buyer actually captures:

  • State tax treatment varies. Not every state follows the federal bonus depreciation rules, so the state-level benefit may differ from the federal one.
  • Depreciation can be recaptured. When an aircraft is later sold, depreciation previously taken can be taxed on the gain.
  • Ownership structure matters. How the aircraft is owned and operated can affect whether use qualifies as business use.
  • Recordkeeping starts on day one. Flight logs documenting the purpose of every trip support the business-use percentage. Documenting the exact placed-in-service date is also important.

This is a factual summary of the rules as described in publicly available sources as of publication. It is not tax advice, and it does not account for any individual buyer’s ownership structure, operations, or state of residence. Holstein Aviation does not provide tax advice. Decisions about how bonus depreciation applies to a specific purchase should be made with a qualified aviation tax advisor or accountant who can evaluate your full situation.

Plan the Purchase, Then the Deduction

Permanent 100% aircraft bonus depreciation gives buyers more flexibility than they have had in years, but the tax year a purchase lands in still depends on when the aircraft is placed in service. If a 2026 deduction is part of your plan, the time to start is now.

Contact Holstein Aviation to start your aircraft search, and bring your tax advisor into the conversation early so the transaction and the timing are planned together.

Sources:

October 14, 2026

100% Aircraft Bonus Depreciation: Why December 31 Still Matters

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Written by 

Don Mercer

Buying & Selling Education, Ownership & Operations