Tax strategy is often the deciding factor in whether and when a buyer acquires a private aircraft. The reinstatement of 100% bonus depreciation in 2025 has brought renewed attention to how business aircraft purchases are structured and timed. For qualified owners, this provision allows the entire cost of an aircraft to be deducted in the year it is placed into service, offering a powerful incentive for acquisition. However, as with any tax advantage, the details matter — and professional tax counsel is essential.

THE POWER OF 100% BONUS DEPRECIATION

Under current rules, an eligible buyer can deduct up to 100% of the aircraft’s purchase price in the first year, provided the aircraft is placed into service and used exclusively for business. For a $20 million aircraft, that means a potential $20 million deduction in the first year.

Unlike traditional depreciation, which spreads deductions over several years, bonus depreciation accelerates the benefit and allows owners to match the purchase directly with income events — such as a particularly profitable year, a liquidity event, or the sale of a business unit.

REQUIREMENTS TO QUALIFY

To secure the 100% bonus depreciation deduction, certain requirements must be met:

• Placed into Service: The aircraft must be delivered, registered, and ready for operational use during the tax year in which the deduction is taken. Merely signing a purchase agreement or making a deposit is not enough.

• Business Use: To qualify for the full 100% deduction, the aircraft must be used entirely for business purposes in the first year.

• Partial Business Use: If business use is greater than 50% but less than 100%, a proportional deduction can still be taken. For example, an aircraft used 70% for business and 30% for personal purposes would allow for a 70% deduction in the first year.

• Minimum Threshold: If business use falls below 50%, the aircraft does not qualify for bonus depreciation and instead falls under standard depreciation rules, potentially triggering recapture provisions.

WHY DOCUMENTATION IS CRITICAL

The IRS has become increasingly vigilant about aircraft usage. Owners must maintain meticulous records of every flight, including passengers, destinations, and business purpose. Logs that demonstrate greater than 50% business use are essential for substantiating the deduction. Without this documentation, deductions may be challenged or disallowed, leading to penalties and additional tax liabilities.

STRATEGIC CONSIDERATIONS

• Timing: Buyers looking to capture the full benefit must ensure their aircraft can be delivered and placed into service before year-end. This often makes pre-owned aircraft attractive since they can be acquired and put into service within weeks.

• Integration with Broader Tax Planning: Bonus depreciation is most powerful when aligned with broader financial events. Coordinating the purchase with a year of unusually high income or capital gains maximizes the benefit.

• Long-Term Outlook: Owners should balance short-term tax advantages with long-term operating costs and mission requirements. Tax savings alone should never be the sole driver of an acquisition.

The reinstatement of 100% bonus depreciation makes 2025 a landmark year for buyers of business aircraft. With the proper structure, documentation, and timing, owners can unlock one of the most significant tax incentives available. Yet this opportunity comes with strict requirements and scrutiny.

At Holstein Aviation, our role is to guide clients through the acquisition process and coordinate with their professional teams to ensure transactions are structured effectively. Holstein strongly recommends that every client work closely with their own tax advisors or legal counsel to design the most effective ownership and tax strategy. With the right team in place — and Holstein Aviation managing the aircraft acquisition — private aircraft ownership becomes not only a lifestyle advantage but also a disciplined financial strategy.