Tax insight

Aircraft Quarterly Newsletter - Q3 2025

Insight
5 minute read
August 27, 2025

What happened?

First, the One Big Beautiful Bill Act (Act) provides for a permanent restoration of 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025.

Second, the Act made changes to federal tax credits aimed at promoting cleaner transportation fuels, including the Section 40B sustainable aircraft fuel credit and the Section 45Z clean fuel production credit.

Third, the Department of Transportation (DOT) released the cents-per-mile rates and terminal charge for the Standard Industry Fare Level (SIFL) fringe benefits rules for the second half of 2025.

Why is it relevant?

First, for financial statement purposes, the effects of the change in bonus depreciation must be recognized in the period in which the law is enacted and reported as a component of the income tax provision relating to continuing operations.

Second, the Act extended the sunset date of the Section 45Z credit by two years to December 31, 2029, while there are other changes to these credits that could apply as early as tax years beginning after July 4, 2025.

Third, 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 using either (1) the general fair market value charter rate of a similar aircraft or (2) the special valuation rules known as SIFL.

Actions to consider

Companies seeking to claim bonus depreciation on qualifying aircraft will need to carefully evaluate how the provision may affect their existing financial statement positions and disclosures to appropriately account for the changes in the period of enactment.

The SIFL rates for the second half of 2025 are effective for personal flights taken by employees on employer-provided aircraft between July 1, 2025, and December 31, 2025. 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 their employees.