Prepare for Turbulence: Big Changes in U.S. Taxes and Tariffs | NBAA

Tax and trade uncertainty can be a headache for business aircraft owners and operators, making planning more difficult and putting big investments – like aircraft transactions – on hold.

“While all aircraft transactions have their challenges, cross-border transactions are particularly complex, as they involve a host of additional tax and regulatory considerations. The more clarity as to the requirements and predictability as to how those requirements are applied, the better,” said Katie DeLuca, a partner at Harper Meyer, whose practice is focused on business aviation. “In light of the uncertain tariff landscape, clarity and predictability are in short supply.”

To DeLuca’s point, 2025 has seen multiple changes in tariffs, as well as changes to state and federal tax law. Fortunately for owners and operators, while the ride has been bumpy, the news hasn’t been all bad.

The Big Win: Immediate Expensing

Sometimes referred to as “bonus depreciation,” immediate expensing is the accelerated deduction of a portion of the cost of business assets in the year the assets are put in service. Rather than depreciating these assets over time, businesses can write off a large portion of their cost – or even their entire cost – in the year they’re put in use.

In 2017, the Tax Cuts and Jobs Act doubled the allowable bonus depreciation deduction for qualified aircraft purchases from 50% to 100%. But the deduction began to phase out in 2023, and was scheduled to be just 40% in 2025. With the passage of the One Big Beautiful Bill Act (OBBBA) in July 2025, however, bonus depreciation is no longer being phased out. Instead, the bonus depreciation rate has reverted to 100% – permanently.

This might seem like a plus, allowing you to deduct an aircraft’s entire cost in the first year. But rushing to buy a plane based on this news alone could be a huge mistake.

“The reintroduction of 100% bonus depreciation is definitely a favorable development for those looking to purchase an aircraft,” explained Robert Davis, a partner at Forvis Mazars specializing in aviation, a member of the NBAA Tax Committee, and chair of the committee’s Advocacy Working Group. “But a variety of factors can disqualify purchasers from using bonus depreciation, from failure to meet placed-in-service criteria to the wrong ownership structure.”

Emily Deaton, CEO of aircraft broker jetAVIVA, concurred: “100% bonus depreciation seems like a really positive thing, right? But there are a lot of boxes you have to check to be sure you qualify, like keeping thorough flight documentation and being able to show sufficient business use. If you don’t check those boxes, you set yourself up for big risks if you’re audited.”

Related article: Don’t Miss These Key Steps for Buying Preowned Business Aircraft

Deciphering the Tariffs Puzzle

The 1979 Agreement on Trade in Civil Aircraft – which initially included Canada, the E.U. (then the EEU), Switzerland, the UK and the U.S., and later added Brazil, Japan, Singapore and others – eliminated tariffs on civil aircraft and components between signatories.

For more than four decades, the agreement supported duty-free trade of aircraft, components and parts. Then, on Feb. 1, 2025, the Trump administration announced tariffs of 25% on imports of Canadian and Mexican origin, and 10% on goods from China. Subsequently, reciprocal tariffs were imposed on nearly all global imports.

U.S. tariff policy has changed dozens of times in the months since then – with tariffs on Chinese goods fluctuating between 10% to 145% – rendering the Civil Aircraft Agreement meaningless. Gone is the stable zero-tariff framework that supported decades of business aviation growth.

As DeLuca put it, “We’re in uncharted territory now.”

Today, tariffs are all over the map: 35% on Canadian products. 50% on Brazilian products. 30% on Chinese products. 15% on EU products. 39% on Swiss products. 50% on steel and aluminum imports, which are critical to aviation manufacturing and MRO operations – except for steel and aluminum coming from the UK, which is subject to a 25% tariff.

Meanwhile, challenges to tariffs imposed under the International Emergency Economic Powers Act (IEEPA) are winding their way through the courts. Recently, the U.S. Court of Appeals for the Federal Circuit struck down tariffs imposed under IEEPA on Canada, Mexico, China and other countries. But the court has stayed its decision until Oct. 14, 2025 and it’s likely the tariffs will remain in place until the Supreme Court rules on the issue.

Related article: Conduct Due Diligence in Aircraft Sales by Knowing Who You’re Selling To

The Forecast: Some Positive Tariff News, but Continued Uncertainty

While tariff policy remains unpredictable, the administration seems to be recognizing the importance of aviation manufacturing and trade to the growth of American businesses and the U.S. economy. The government is granting or has indicated that it will grant partial or complete tariff relief to imports of civil aircraft and parts from the EU, the UK and Brazil, as well as allowing duty-free imports of civil aircraft and parts that qualify under the U.S.-Mexico-Canada Trade Agreement (USMCA).

Yet confusion remains.

“There’s a lot of gray area in the rules right now,” said DeLuca. “For example, USMCA is not quite a silver bullet, at least with respect to used aircraft. Based on the plain language of the applicable rules and regulations, the exemption may not be applicable to a used Canadian-origin aircraft that has been based and operated outside of Canada or Mexico. Further, even in cases where it is applicable, complying with the specific requirements – such as obtaining a certificate of origin with all of the required data elements – can be difficult.”

It’s also important to note that tariff risk extends to maintenance. If your plane is serviced in the U.S. using imported parts, it could cost you.

“We were working on a deal on a plane that was scheduled to go in for an engine overhaul shortly after the transaction closing,” said Deaton. “The plane was on an engine program, so it seemed like there wouldn’t be any additional cost exposure for the buyer. But when they checked with the center where the plane would be serviced, the quote was for hundreds of thousands of dollars – because a number of parts that would be used in the engine overhaul were of Chinese origin.”

State-Level Tax Risk: The Wake-Up Call

In May, the state of Washington enacted a law that will revamp the state’s tax treatment of business aircraft ownership and leasing starting on April 1, 2026. The law tightens the criteria for claiming the resale exemption on aircraft purchases, targets “tax avoidance structures,” and introduces a 10% surcharge on aircraft worth more than $500,000 that applies to both sales and use taxes.

The new law sent shockwaves through the business aviation community. Common ownership models, such as leasing through affiliated entities, may no longer qualify for exemptions. Operators must prepare for increased scrutiny, retroactive tax liability and higher acquisition costs.

“We’re seeing owners in Washington [state] who are selling their aircraft, or a share in an aircraft, or considering relocating their aircraft out of state to try to avoid the tax exposure, although we don’t have clarity on whether that will help or not,” said Deaton.

The situation is a reminder that state and local laws can change swiftly – and play an outsize role in business aviation strategy and decision making.

Final Thoughts and Next Steps

How best to navigate today’s tax and trade landscape? These are complicated topics. To avoid unexpected risks and identify promising opportunities, owners and operators need to speak with people who understand the tax and legal nuances. Check out the sidebar to learn more.

Download NBAA’s comprehensive, members-only resource, “100% Bonus Depreciation, Advanced Technical Implications.”