When tax law hands an industry a big break, buyers pay attention. For private jets, that rule is bonus depreciation. The return of full expensing in 2025 reshaped incentives. It pushed firms and owners to rethink timing, fleets and finance. The result: a clear uptick in aircraft demand, used-jet interest and charter offerings.
What bonus depreciation does and who it helps
Bonus depreciation lets businesses deduct a large portion, or all, of an asset’s cost in the year it is placed in service rather than over many years. That up-front tax relief improves cash flow. It makes a $10 million mid-size jet much easier to justify to a CFO. Small companies and high-net-worth buyers who use aircraft for business can see meaningful after-tax savings. The incentive also applies to many pre-owned aircraft when rules and timing align. (See IRS guidance on additional first-year depreciation.) (IRS)
A quick history of the incentive and the 2025 change
Bonus depreciation is no newcomer. Policymakers first expanded it after the 2001 recession, and it reappeared in multiple stimulus packages through the 2000s and 2010s. The Tax Cuts and Jobs Act of 2017 made 100 percent expensing broadly available from 2018, then scheduled a phase-down beginning in 2023. Analysts warned that letting the incentive expire could chill investment. In mid-2025, Congress and the White House acted to make full expensing permanent, restoring certainty for buyers and operators. That legislative move re-centered bonus depreciation as a core growth lever. (The Tax Adviser)
Why the private aircraft market responded fast
The economics are simple. A buyer who can expense the full purchase price in year one reduces taxable income immediately. That translates into a lower effective after-tax cost. Many aviation brokers reported a surge in inquiry and deals after the 2025 law change. Manufacturers saw stronger order interest at the high end. General Aviation Manufacturers Association (GAMA) shipment data showed business jet deliveries climbing in 2024 and continuing into 2025 as demand firmed. The market’s reaction is consistent with prior cycles where tax incentives drove quicker purchase decisions. (GAMA)
Pre-owned jets, leasing and charter benefits
The most visible effect came in the used market. Buyers who missed new-production windows often turn to pre-owned aircraft. Those planes became more attractive because bonus depreciation can apply to certain used aircraft if they meet eligibility rules. That sparked bidding activity and tightened inventory in segments under $10 million and well above. Operators also leaned on the incentive by placing newly acquired aircraft into Part 135 charter service. Doing so both increases utilization and helps justify the tax treatment under business-use tests. For many fractional and charter operators, that calculus unlocked practical fleet expansion. Industry finance desks reported rising interest in asset-backed lending for jets, even as interest rates stayed higher than in past booms. (avbuyer.com)
Broader ripple effects across the aviation supply chain
When buyers move, the whole ecosystem feels it. Financing desks, MROs (maintenance, repair and overhaul), appraisers, and brokers all saw higher demand. Manufacturers ramped staffing decisions to meet delivery schedules. Flight departments found incentive-aligned arguments to accelerate replacement cycles. The cumulative effect pushed billings and deliveries higher. GAMA reported increases in business jet billings and highlighted the continuing momentum in 2024–25. That growth supports jobs and high-skilled manufacturing work across several states. (GAMA)
The policy trade-offs and macro context
Policymakers framed the permanent expensing change as pro-investment. Critics note the budget cost of accelerated depreciation and warn of distributional impacts. Economists and tax analysts caution that while bonus depreciation boosts near-term investment, the long-term fiscal trade-off is real. The Tax Foundation and Congressional Research Service have analyzed how full expensing affects investment incentives and federal revenue, underscoring the importance of weighing short-term growth against long-term budget effects. (taxfoundation.org)
Compliance, predominant-use tests and IRS scrutiny
Tax rules are strict. To claim the deduction, buyers must meet business-use thresholds and maintain detailed logs. The IRS has increased scrutiny of business aircraft deductions in recent years. Owners who mix personal and business use face recapture risks and penalties if records fall short. Aviation tax specialists now emphasize written policies, flight logs, and contemporaneous substantiation to survive audits. In practice, accountants and tax counsel became essential partners for many buyers after the 2025 change. Bonus depreciation can deliver big advantages, but it comes with compliance responsibilities. (The Tax Adviser)
How savvy buyers, brokers and operators adapt
Timing matters. Buyers who planned purchases around the law change often saw the largest advantages. Some corporations accelerated capital plans. Others pursued leases or structured transactions that preserved liquidity while capturing tax benefits. Brokers counseled clients to align closing and in-service dates precisely. Charter operators evaluated whether increased utilization could validate a business-use narrative. For those who moved quickly and documented carefully, the payoff was tangible. For those who guessed wrong on timing, the window of benefit narrowed quickly. Industry advisors now recommend a checklist that includes IRS rules, financing terms, and operational plans before any acquisition.
What this means for future market dynamics
With bonus depreciation set as a durable policy tool, the private aircraft market enters a different operating regime. Expect higher baseline demand, continued consolidation among brokers and operators, and increased activity in pre-owned channels. At the same time, lenders will watch credit spreads and aircraft values closely. Appraisers must account for tax-driven demand when setting fair values. And regulators may refine rules to prevent misuse. The long-term winners will be firms that combine financial savvy with rigorous compliance and operations planning.
Bottom line for buyers and the industry
Bonus depreciation reshaped incentives and helped restart investment cycles in private aviation. The 2025 permanent change lowered the after-tax price of aircraft and made fleet upgrades and charter growth viable strategies. But buyers must plan carefully. Work with tax counsel, maintain precise records, and build an operational use case that stands up to scrutiny. When used correctly, bonus depreciation offers a powerful tool to modernize fleets, boost utilization and support aviation-sector jobs.
References:
- Source: IRS — Additional First Year Depreciation Deduction (Bonus) — FAQ. (IRS)
- Source: GAMA — 2024 Annual Data and Industry Outlook. (GAMA)
- Source: Tax Foundation — Effects of Permanent 100% Bonus Depreciation. (taxfoundation.org)
- Source: Congressional Research Service — Section 179 and Section 168(k) Expensing Allowances. (Congress.gov)
- Source: The Tax Adviser — IRS scrutiny of business aircraft use. (The Tax Adviser)
- Source: Industry coverage — flightlevel and trade articles on the 2025 policy change. (FlyUSA)
Disclaimer: This article explains general trends related to bonus depreciation and the private aircraft market and draws on public industry and tax analysis. It does not constitute tax, legal or investment advice. Buyers should consult qualified tax professionals and legal counsel to assess eligibility, compliance requirements and the financial impact on their specific circumstances.
