Trump’s Bold Move: 100% Bonus Depreciation Return Could Ignite Aviation Industry

For those unfamiliar with the concept, bonus depreciation allows businesses to immediately deduct a substantial portion of the cost of qualifying assets in the year they are placed in service, rather than spreading deductions over time. The Tax Cuts and Jobs Act of 2017 initially permitted 100 percent bonus depreciation, but this benefit has been gradually phasing out in recent years.

The potential reinstatement of 100 percent bonus depreciation is particularly exciting for the aviation industry. Aircraft purchases, which often represent significant capital investments, could become much more attractive from a tax perspective. This change also could spur a wave of new aircraft acquisitions, benefiting both buyers and the industry as a whole.

For business owners who have been considering aircraft purchases, this announcement should serve as a wake-up call. If the proposed changes are implemented, there could be a surge in demand for aircraft, potentially leading to reduced inventory and inflated prices. Acting quickly to secure an aircraft before this rush could result in substantial savings and tax benefits.

Let’s break down what this means for  business owners:

It’s important to note that Trump’s announcement is just the first step. Changing the tax code to restore 100 percent bonus depreciation would require congressional action. Both the House and Senate would need to pass legislation, which the president would then have to sign into law. However, given the potential economic stimulus this change could provide, there’s likely to be strong support among many lawmakers.

The aviation industry stands to benefit significantly from this proposed change. Bonus depreciation has long been recognized as a powerful tool for stimulating investment in the sector. According to the National Business Aviation Association (NBAA), bonus depreciation delivers long-term stimulus to industries like general aviation (GA), which provides high-skill, high-paying jobs for more than 1.1 million Americans and generates $219 billion in economic activity annually in the United States.

Moreover, this tax incentive gives American companies access to advanced equipment, including aircraft, making them more competitive while preserving jobs in aviation-related manufacturing—one of the few industries that contributes positively to U.S. trade balance.

For those who may be hesitant due to the gradual phaseout of bonus depreciation in recent years, it’s worth revisiting the benefits this tax incentive provides. The Tax Cuts and Jobs Act of 2017 initially provided for 100 percent bonus depreciation, allowing taxpayers immediate deduction of the cost of aircraft acquired and placed in service after September 27, 2017, and before January 1, 2027 (or January 1, 2028, for longer production period property and certain aircraft).

This provision applied to both factory-new and pre-owned aircraft, as long as it was the taxpayer’s first use of the aircraft. The proposed reinstatement would likely follow similar guidelines, offering a tremendous opportunity for businesses looking to upgrade their fleet or enter the world of private aviation.

However, it’s crucial to approach this opportunity with careful planning and expert guidance. While the potential tax benefits are significant, aircraft purchases should align with the overall business strategy and financial goals. Consulting with tax professionals and aviation experts can help to navigate the complexities of aircraft depreciation and ensure  maximization of the benefits of this potential tax change.

Trump’s proposal to bring back 100 percent bonus depreciation represents a potential game-changer for business owners, particularly those already established in or considering entering the aviation sector. The opportunity to immediately deduct the full cost of an aircraft purchase could provide substantial tax savings and stimulate economic growth. However, with this opportunity comes the likelihood of increased demand and potentially rising prices.

For business owners considering aircraft purchases, the message is clear: Start planning now. By being proactive, they can be in position to take full advantage of this potential tax benefit while potentially avoiding the rush that could follow its implementation. If financing is something worth considering, I highly advise talking to us at FLYING Finance to get the process started. Remember, in the world of business and aviation, timing is everything. Don’t let this opportunity fly by—the next big tax play could be just on the horizon.