Private-Jet Owners Spared Tax Hit in Senate GOP Plan

Updated on
Senate Finance Committee Approves Tax Plan

Senate Republicans say their tax bill will bring big tax cuts for middle-class families and businesses. It’ll also make sure that owners of private jets don’t get hit with the same taxes that commercial carriers face.

The revised bill that emerged from the Senate Finance Committee this week has a provision that scraps excise taxes on management services for private aircraft. The exemption would apply to expenses including storage, maintenance and hiring a crew. The provision is expected to cost the federal government less than $50 million over a decade, according to the nonpartisan Joint Committee on Taxation.

The exemption clarifies the boundaries of existing tax laws, Troy Rolf, an attorney at GKG Law, said Friday in a phone interview. Commercial aviation operators are subject to taxes including a 7.5 percent excise levy. That doesn’t apply to private operators, who instead pay a higher tax on fuel.

Some private-jet owners let management companies charter the planes to other customers. The Internal Revenue Service has scrutinized such cases in recent years to determine whether those planes should qualify as commercially owned. If so, the owner’s personal trips would be subject to excise taxes.

People who lease aircraft for more than 31 consecutive days also would be eligible for the exemption. The tweak wasn’t included in an earlier version of the Finance Committee’s tax plan but was introduced in both the House and the Senate in February, with bipartisan support.

(Corrects headline, first and third paragraphs to show that the proposal prevents a tax increase.)

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE