Tax Insight

Aircraft Quarterly Newsletter – Q2 2026

Insight
5 minute read
June 12, 2026

What happened?

Important developments affecting the use of corporate aircraft include an increase in federal excise tax rates for taxable air transportation of persons, effective January 1, 2026, as well as a decision by the Sixth Circuit Court of Appeals on the federal excise air transportation tax (ticket tax) imposed by Section 4261.

Why is it relevant?

A failure to apply the federal excise tax rules properly may adversely impact the operator of a company aircraft, while the court’s reversal of the holding in Flight Options, LLC v. United States addresses the scope of services and fees subject to the ticket tax and how to apply and calculate the tax for unresolved quarters predating enactment of Sections 4261(j) and 4043.

Actions to consider

In light of the rate increases for certain federal excise tax rates/fees, companies may want to review their use of business aircraft to confirm utilization of the appropriate tax rates/fees. For fractional interests in an aircraft not subject to Section 4261(j) that are subject to the collection of the ticket tax, the amount of that tax should be calculated based on usage fees (i.e., expenses incurred for a wheels-up, wheels-down flight) and exclude any fixed fees, such as monthly management fees or any other overhead charges.