Aircraft Club February 2024: SIFL rates for the first half of 2024

What happened?

This month, the Department of Transportation (DOT) released the cents-per-mile rates and terminal charge for the first half of 2024 for the Standard Industry Fare Level (SIFL) fringe benefits rules.

Why is it relevant?

When an employer allows an employee to use a company-provided private aircraft for personal reasons, a taxable fringe benefit has been extended to that employee. Under current law, the employer may choose to value these personal flights by either using (1) the general fair market value charter rate of a similar aircraft or (2) the special valuation rules known as SIFL.

Action to consider

The SIFL rates for the first half of 2024 are effective for personal flights taken by employees on employer-provided aircraft between January 1, 2024, and June 30, 2024. Affected employers should review the aircraft flight logs to determine which flights taken during that period were personal in nature to calculate and report the appropriate taxable fringe benefit amount to its employees.

Standard SIFL rates

The SIFL rates are a special valuation rule to determine the amount an employer must include in an employee’s income for personal travel on an employer-provided aircraft. SIFL amounts are calculated in three steps:

Step 1: The number of statute miles flown during the flight is multiplied by the SIFL cents/mile rate for the period the flight was taken for each segment of the flight (i.e., the highest rate applies to the first 500 miles, the next highest rate applies to the next 1,000 miles, and the lowest rate applies to miles over 1,500).

Step 2: The amount calculated in Step 1 is multiplied by the appropriate aircraft multiple. The aircraft multiple is based on the maximum certified take-off weight of the aircraft and the type of employee (e.g., a control employee or a non-control employee).

Step 3: The applicable terminal charge is added to the value calculated in Step 2.

DOT determines the SIFL cents/mile rates and the applicable terminal charge and updates them semi-annually. The applicable rates for January 1, 2024, through June 30, 2024, are as follows:

Observation: The IRS issues routine semi-annual guidance adopting the DOT SIFL rates for tax purposes without change. It is expected that the next IRS issuance will continue to adopt the DOT SIFL rates ministerially and authorize use of the alternative DOT SIFL rates.