Capture 100% Bonus Depreciation

December 31, 2025 is the Last Day to Place a Business Aircraft in Service to
Capture 100% Bonus Depreciation.

On July 4, 2025, President Donald Trump signed into law comprehensive tax-and-
spending legislation that the White House dubbed the “One Big Beautiful Bill,”
reinstating 100% bonus depreciation for qualified business aircraft acquisitions
retroactive to January 20, 2025. 100% bonus depreciation allows businesses to
purchase capital equipment, including aircraft, and claim 100% of the depreciation in the first year versus spreading it over several years.
Before this legislation passed, bonus depreciation was phased down to 40% in 2025 and scheduled to completely phase-out by 2027. Under the new act, 100% bonus depreciation is made permanent – remaining available in future years with no scheduled phase-down – though it remains subject to future legislative changes.
The business aviation industry is now surging, with demand for pre-owned aircraft far outpacing available supply, and with most 2025 production slots for new aircraft long sold out. For those who need an aircraft in 2025 for operational or tax reasons, the pre-owned market may be the only viable option.
While bonus depreciation is a powerful tool, it requires careful navigation of multiple sections of the tax code. One section determines if a taxpayer qualifies for bonus depreciation, and another section determines how much is deductible and the documentation required.
In the mad dash to the finish line for tax-motivated aircraft buyers in 2025, it is
especially important to understand how an aircraft is considered “placed in service” to qualify for bonus depreciation.
What Does “Placed in Service” Mean?
IRS regulations define “placed in service” as the date when property is “first placed in a condition or state of readiness and availability for a specifically assigned function” [Regs. Sec. 1.167(a)-11(e)(1)(i)].
Signing a purchase agreement, putting down a deposit, or even pre-paying for the entire aircraft is not sufficient to place the aircraft in service. The taxpayer must hold legal title of the aircraft, and the aircraft must be ready and available for its intended business use.
Flying an actual business flight is one clear way to demonstrate that an aircraft has
been placed in service. However, it is not an absolute requirement. The key
consideration is whether the plane is available and ready for its assigned function.

For instance, if the aircraft is sitting in the hangar, crewed, and fully prepared for a
business trip, but bad weather prevents departure, it can still be argued that the plane has been placed in service.
That said, would it be wise to schedule and complete at least one bona fide business flight before year end to clearly establish that the aircraft is being used for its intended purpose? Absolutely.
What about Green Aircraft?
A “green aircraft” (delivered with airworthiness certificate but lacking completed interior or paint) poses a unique challenge. While it can technically fly, it is not in a condition suitable for its assigned function of transporting passengers for business trips. As such, a green aircraft would not meet the placed in service requirement for depreciation.
The Race to Close in 2025
Successfully closing on a business aircraft involves more than simply finding one that fits your mission and budget. The next steps typically include securing financing and engaging a reputable maintenance facility to conduct a pre-purchase inspection. Just as critical is assembling a team to manage the acquisition and implement an ownership structure that satisfies tax and FAA requirements.
With the deadline of December 31, 2025 rapidly approaching, buyers aiming to capture 100% bonus depreciation must act quickly and assemble an experienced team to manage the acquisition.
Bottom line: If your goal is to place an aircraft in service in 2025 and maximize tax
benefits, the clock is ticking.