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Proposed Depreciation Schedule Changes

February 3, 2015

NBAA continues to strongly advocate for maintaining the five year depreciation schedule for non-commercial business aircraft under the Modified Accelerated Cost Recovery System (MACRS). Current depreciation schedules were recommended by the IRS decades ago, made law by Congress in the 1980’s, and apply to everything from construction equipment, to trucks, to aircraft. The idea behind such policies is to encourage American businesses to continually upgrade the equipment they use, so they can remain competitive, especially in today’s highly competitive global marketplace.

However, proposals such as the one included in President Obama's fiscal year 2016 budget would lengthen the depreciation schedule for non-commercial aircraft from five to seven years. This change would discourage investment in general aviation aircraft and is at odds with prior administration policies that were designed to accelerate depreciation in an effort to stimulate capital investments.

The current depreciation schedule for business aircraft is not a "loophole" as it is being portrayed, but rather an effective policy to stimulate capital investment. Singling out business aviation for a longer depreciation schedule goes against what numerous economists have long agreed on, depreciation schedules that allow deductions to be taken closer to when a purchase is made incentivize many kinds of capital investments, including in aircraft.

General aviation is a critical engine in America's economy, serving as a vital link in the transportation network, employing 1.2 million workers and generating $150 billion in economic activity. Modifying the depreciation schedule has the potential to harm the industry, reduce new aircraft deliveries and threaten jobs.

NBAA will continue to strongly advocate for maintaining the current depreciation schedule for business aircraft and will keep Members informed on this important issue.


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