100% Bonus Depreciation for 2021?
2021 Legislative Outlook
Until the 2017 tax reforms, bonus depreciation had been available only to factory new aircraft. With the 2017 Tax Cuts and Jobs Act, bonus depreciation was increased to 100% and it applies to both new and pre-owned business aircraft. This law change has been a boon to the general aviation industry and it continues to be applicable for 2021 acquisitions - at the moment.
The new administration has promised major changes in tax policies. It is expected that both corporate and individual income tax rates will increase for 2021. There is no specific discussion of repealing 100% bonus depreciation currently, but there is talk of repealing the 2017 tax reforms. As Congress negotiates and finalizes the tax laws changes, bonus depreciation may revert back to 50% and applicable to factory new aircraft only.
Historically, tax law changes were not implemented retroactively prior to the passage of the legislation in Congress. Therefore, if your business is considering an aircraft acquisition, you should speed up the process to complete the acquisition under the current applicable laws.