One Big Beautiful Bill Act (OBBBA) & Bonus Depreciation

With the Labor Day holiday behind us, summer is effectively over and the fourth quarter is nearly upon us. Q4 has always been the busiest time of year for aircraft transactions, largely due to tax and financial planning considerations. This year will be no different—but 2025 brings a major shift in the depreciation landscape that makes this season especially significant.

100% Bonus Depreciation Restored

On July 4, 2025, Congress enacted the One Big Beautiful Bill Act (“OBBBA”), which permanently restores 100% bonus depreciation under IRC §168(k) for qualifying property—including aircraft—placed in service after January 19, 2025. This replaces the prior phasedown schedule under the Tax Cuts and Jobs Act, which had bonus depreciation dropping to 40% in 2025, 20% in 2026, and disappearing in 2027 .

Now, aircraft buyers who close and place their aircraft in service in 2025 may take full 100% bonus depreciation, provided all qualification criteria are met (business use >50%, unrelated-party business use thresholds, no related-party transfers, etc.) .

While this law creates one of the most favorable tax environments in years, timing and execution matter—particularly around “placed in service” rules.

The 2025 Market Environment

The market in 2025 has seen an uptick in activity starting in July. It is hard to determine if it is a buyer’s or sellers’ market based on feel.

Tax scrutiny remains a point of interest. The IRS had a campaign targeting private aircraft usage by high-income taxpayers, corporations, and partnerships is ongoing, and several states have launched parallel audits. The tax environment is one of heightened enforcement, requiring careful documentation of business use and compliance with exemption requirements.

Key Year-End Considerations

1. 1. Inspection Scheduling – Ensure your chosen facility can complete inspections and repairs in time. Pre-purchase inspections should ideally begin by October 1st if closing within 2025.
   2. Market Conditions – Assess whether your expectations as a buyer or seller align with current market realities.
   3. Financing Lead Times – Underwriting typically takes at least 15 business days. Start early.
   4. Delivery Location & State Taxes – States monitor aircraft arrivals closely and may audit immediately. Confirm exemptions and compliance ahead of closing.
   5. Business Use Documentation – To support bonus depreciation, confirm your 2025 flight activity will meet business use thresholds. Keep accurate logs (purpose, passengers, routes).
   6. Closing Flexibility – Avoid rigidly pre-planning inaugural flights. Delays from inspections or financing are common—build flexibility into your plans.

Bottom Line

2025 offers a rare opportunity: a permanent return to 100% bonus depreciation combined with a balanced market environment. But the benefits only accrue if aircraft are properly placed in service this year, business use is substantiated, and state and federal compliance steps are respected.

As year-end approaches, the best outcomes will come from locking down inspection schedules, preparing financing early, planning strategically for delivery, and maintaining flexibility in execution.