Aircraft Depreciation After the 2025 Tax Law: MACRS, 100% Bonus, Section 179 and Recapture

This guide is for business owners who fly a piston aircraft for work and want to understand how the depreciation deduction is actually calculated after the One Big Beautiful Bill Act. It covers the mechanics (recovery periods, bonus depreciation, Section 179, the alternative depreciation system and recapture) with a worked $450,000 example.

This page explains general federal tax rules as of September 2026. It is not tax or legal advice. Confirm how any of it applies to you with a CPA or aviation tax attorney before you buy.

What changed in 2025: 100% bonus depreciation is now permanent

Bonus depreciation (the special depreciation allowance in IRC Section 168(k)) had been phasing down under the 2017 tax law. The One Big Beautiful Bill Act, signed July 4, 2025, ended that phase-down. Eligible property acquired after January 19, 2025 qualifies for 100% bonus depreciation, with no scheduled expiration. The IRS published implementing guidance in Notice 2026-11. Four details matter for aircraft buyers:

• The acquisition date controls, not the closing date. Property generally is not treated as acquired after the date a written binding contract to buy it was signed. A factory order with a deposit signed before January 20, 2025 may stay under the prior-law percentage even if the aircraft is delivered in 2026. Have your CPA review the contract dates.
• Used aircraft qualify if it is your first use of that aircraft and you did not buy it from a related party. Most pre-owned piston purchases meet this test, but confirm it for family or affiliated-company sellers.
• A one-time transition election. For the first tax year ending after January 19, 2025 (2025 for calendar-year filers), a taxpayer could elect 40% instead of 100%, or 60% for longer-production-period property and certain aircraft. It matters mainly if a 2025 return is still open.
• Bonus is automatic unless you elect out. The election out applies to every asset in the same class (for example, all 5-year property) that you place in service that year, not aircraft by aircraft.

Which MACRS class does a piston aircraft fall into?

Under the Modified Accelerated Cost Recovery System (MACRS), the recovery period for an aircraft depends on how it is operated, not on its size or engine count. NBAA summarizes the split in its business aircraft depreciation schedule.

If you skip bonus depreciation, the standard MACRS percentages under the half-year convention are:

The half-year convention treats the aircraft as placed in service at mid-year, whatever the month. There is one exception. If more than 40% of the depreciable basis of everything you place in service during the year lands in the last three months, the mid-quarter convention applies. A December aircraft purchase depreciated without bonus would then get just 5% in year one on 5-year property instead of 20%. Bonus depreciation is not reduced by either convention.

Bonus vs. Section 179 vs. regular MACRS vs. ADS: how do the four paths compare?

Why would anyone elect out of 100% bonus? The usual reasons are an income spike expected in later years, a state that does not follow federal bonus depreciation, or a first-year deduction so large that loss limits would strand part of it. The tradeoffs are covered in our year-of-purchase tax playbook.

What are the Section 179 limits for aircraft in 2025 and 2026?

Sources: IRS Publication 946 (2025) and Rev. Proc. 2025-32 (2026). A piston buyer is unlikely to hit the dollar caps. These limits bind far more often:

• The business income limit. Section 179 cannot exceed your taxable income from the active conduct of a trade or business. Any excess carries forward.
• The first-year use test. You must use the aircraft more than 50% for business in the year you place it in service (Pub. 946).
• Pass-through entities. For an LLC taxed as a partnership or an S corporation, the limits apply at both the entity level and the owner level.
• State caps. Some states cap Section 179 far below the federal limit or ignore federal bonus depreciation entirely. California is one well-known example.

With 100% bonus now permanent, many piston buyers do not need Section 179. It is mainly useful when you want to choose an exact deduction amount.

Worked example: depreciating a $450,000 aircraft

Illustrative only. Assumptions: $450,000 total cost including capitalized acquisition costs; acquired and placed in service in 2026; operated under Part 91, so 5-year property; half-year convention; business use constant each year. The four columns show the same aircraft under four fact patterns.

• Scenario A deducts $450,000 in year one. At an assumed 35% combined marginal rate, used only to show scale, that lowers the year-one tax bill by about $157,500.
• Scenario B deducts $90,000 in year one (about $31,500 at the same assumed rate) and the rest over five more tax years. If the aircraft were placed in service in the fourth quarter and the mid-quarter convention applied, year one would drop to $22,500.
• Scenario C depreciates only the business share, $360,000. The $90,000 personal share is never deductible.
• Scenario D fails the more-than-50% test, so there is no bonus and no Section 179. The $202,500 business share is depreciated straight-line across seven tax years, assuming the commonly cited 6-year ADS period.

What happens if business use drops to 50% or less in a later year?

Aircraft are listed property under IRC Section 280F. If you met the more-than-50% test when you placed the aircraft in service and later fail it, you must include the excess depreciation in income in the year you fail. Excess depreciation means what you actually claimed (including bonus and Section 179) minus what ADS would have allowed. From then on you depreciate under ADS. The recapture is reported on Form 4797.

Example (continuing Scenario A): business use falls to 40% in year three. Under the assumed 6-year ADS period, ADS would have allowed $37,500 in year one and $75,000 in year two, a total of $112,500. You claimed $450,000, so $337,500 becomes ordinary income in year three. This is the single most expensive way to lose a bonus deduction. The business-use guide covers what counts toward the test and how to document it.

How does depreciation recapture work when you sell the aircraft?

An aircraft is Section 1245 property. When you sell it, any gain up to the total depreciation you have taken is ordinary income. Only gain above your original cost is Section 1231 gain, which is rare for piston aircraft. If you sell below your adjusted basis, the loss on the business share is generally a Section 1231 loss.

Example: the $450,000 aircraft is sold in year five for $380,000.

Both paths end at the same net figure, $70,000, which is the aircraft's actual loss in value. Bonus depreciation changes when you deduct, not how much. Its value comes from deferring tax, and from any difference between your tax rate in the purchase year and your rate in the sale year.

• No like-kind exchange. Since 2018, Section 1031 applies only to real property. Trading an aircraft in on another one is a taxable sale, and the recapture lands in the trade year.
• "Allowed or allowable." Your basis drops by the depreciation you were entitled to claim even if you did not claim it. Skipping depreciation does not avoid recapture.

Which other depreciation details do aircraft owners miss?

• Capital improvements are separate assets. An engine overhaul or avionics upgrade that counts as an improvement is depreciated as its own asset, generally in the same class, and can qualify for bonus depreciation. Whether a given job is a deductible repair or a capitalized improvement is a facts-and-circumstances question under the tangible property regulations.
• Acquisition costs belong in basis. Sales or use tax paid on the purchase is added to the aircraft's basis, and so are costs that generally facilitate the purchase. With 100% bonus they are still deducted in year one, but as depreciation.
• International flying. Property used mostly outside the United States must use ADS. There is an exception for FAA-registered aircraft operated to and from the United States. If you fly often to Canada, Mexico or the Bahamas, raise this with your advisor.
• Financing does not shrink basis. A financed aircraft is depreciated on its full cost. See the year-of-purchase playbook for how that interacts with interest and cash flow.

How this guide differs from related guides

This page covers depreciation mechanics only. What counts as qualified business use, and whether you, your company or an LLC should own the aircraft, is in business use of an aircraft for tax. Placed-in-service timing, operating-expense deductions and financing are in the year-of-purchase aircraft tax deduction playbook. Choosing a professional is covered in how to hire an aviation tax advisor. For entity questions, see owning an aircraft in an LLC. Sales and use tax is covered in aircraft sales tax by state.

Frequently asked questions

Tax rules summarized as of September 2026. The examples are illustrative and use assumed figures. Confirm with a CPA or aviation tax attorney for your situation.