Private Jet Tax Benefits: How Ownership Can Reduce Your Tax Burden

Before We Begin: A Quick Disclaimer This article is for informational purposes only and not tax or legal advice. Always consult with a qualified tax advisor before making financial decisions related to aircraft ownership.

Why Taxes Matter in Jet Ownership

Many high-income individuals explore private jet ownership not just for convenience or flexibility, but for the private jet tax benefits that come with proper structuring. With the right setup, an aircraft can become a legitimate business tool that provides deductions, deferrals, and strategic tax advantages. But those benefits only apply if the aircraft is used, structured, and documented the right way.

Understanding Private Jet Tax Benefits

Bonus Depreciation for Private Jets (U.S. Only)

Under U.S. tax law, particularly the Tax Cuts and Jobs Act (TCJA), certain aircraft purchases can qualify for bonus depreciation if:

The aircraft is used primarily for business (over 50% of total use)
The purchase is new to the taxpayer (not necessarily brand-new)
The taxpayer materially participates in the business activity

This can allow you to deduct a large portion of the aircraft’s value in the first year, reducing taxable income significantly.

Current Bonus Depreciation Rates

2023: 80%
2024: 60%
2025: 40% (unless legislation changes)

Deductible Operating Expenses for Private Jets

When a jet is used for qualified business travel, ongoing expenses may be deductible as business costs:

Crew, Maintenance, and Fuel

Crew salaries and training
Hangar rent
Fuel and maintenance

Management and Insurance Costs

Insurance
Aircraft management company fees

All deductions must be proportionate to actual business use, and personal flights are excluded unless documented and allocated correctly.

Entertainment Flights Come with Limits

The IRS places strict limits on deductions related to entertainment, even when it involves clients or employees. Under Section 274, expenses for entertainment flights are often partially or fully non-deductible. To claim allowable deductions, owners must keep:

Purpose of each flight
Passenger details and roles
Business justification for the trip

Improper or incomplete documentation can invalidate the deduction entirely, and raise red flags in an audit.

The Role of Aircraft Ownership Structure in Maximizing Tax Benefits

To take advantage of these tax benefits, most jet owners structure ownership through a business entity, such as an LLC or corporation. Common strategies include:

Leasing the aircraft to a business entity
Setting up a dry lease or flight department under Part 91
Using an aircraft management company for day-to-day operations

The key is ensuring the structure is compliant with both FAA operational rules and IRS tax rules, which often don’t align naturally. A poor setup can expose owners to tax penalties or even FAA enforcement actions.

Don’t Overlook Sales & Use Tax for Private Jet Purchases

Beyond federal income tax, many states assess sales or use tax at the time of purchase. Some offer legal exemptions or strategies to reduce or avoid this, such as:

Flyaway exemptions
Leasing structures
Out-of-state delivery or predominant out-of-state use

These rules vary state by state, and mistakes can be extremely costly. State tax auditors are increasingly sophisticated in tracking aircraft movements and enforcing compliance.

How to Maximize Private Jet Tax Benefits While Staying Compliant

Document every business-related flight
Maintain clear separation of business and personal use
Engage both aviation and tax professionals
Use management systems to track utilization and expenses

Final Thoughts on Private Jet Tax Benefits

Yes, a private jet can help reduce your tax burden. But it’s not automatic, and the benefits come with strict compliance requirements. With intentional planning, proper ownership structure, and meticulous recordkeeping, these tax advantages can be significant.

La Casa Jet works with trusted aviation tax professionals to ensure your aircraft is operated safely and strategically. Whether you’re buying your first jet or optimizing your current setup, we can connect you with the right expertise to ensure your jet makes sense in the sky and on paper.