100-percent bonus depreciation is back

Broadly speaking, 100-percent bonus depreciation was allowed for qualifying property placed into service between September 28, 2017, and December 31, 2022. Business aircraft were included as “qualifying property.” For example, if you bought an airplane valued at $1 million, then as long as you followed the rules, you could depreciate $1 million in the first year that the new law took effect, even if your actual cash outlay wasn’t $1 million because you financed the asset.

The upside was that, for that year, you would have a huge offset to your income and therefore reduced tax liability. That 100-percent bonus depreciation had a phasedown schedule built into the law. The maximum bonus depreciation became 80 percent for qualifying property placed into service in 2023, 60 percent for qualifying property placed into service in 2024, and 40 percent for qualifying property placed into service in 2025.

As of the July 4, 2025, signing of the One Big Beautiful Bill Act, 100-percent bonus depreciation not only returned, but it also became retroactive to January 20, 2025. The law also eliminates the phasedown schedule of the 2017 tax law.

But the acquisition date matters: For the 100-percent deduction to apply, the qualifying property must have been both acquired and placed into service after January 19, 2025. A binding written contract for acquisition made before January 20, 2025, would not qualify for the 100-percent rate.

The bottom line: The 100-percent bonus depreciation is a great option for people looking to reduce their tax liability for the current year. Aircraft tend to be expensive, so this offers a good offset for one’s business. Aircraft also tend to hold their value well, which allows for flexibility in taking the bonus depreciation, whether you take 100 percent now or spread it out over subsequent tax years.

Which brings up some caveats: Not all states automatically conform to the federal tax changes regarding bonus depreciation. Businesses should consult a tax advisor to understand how these federal changes interact with their state’s tax laws.

Choosing to depreciate 100 percent in year one precludes the ability to depreciate the airplane in years two through five, the typical length of time businesses keep airplanes. AOPA Finance recommends you consult your tax advisor and financial planner when you’re looking at buying an airplane to take advantage of the bonus depreciation.

Bonus depreciation also typically isn’t available to individuals buying for personal purposes, buyers not registering the aircraft to a business, or those who do not intend to use the aircraft for business purposes. You need to be able to show that you have a valid business case for the use of the aircraft. That’s something your tax professional can help you determine.

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