IRS Guidance Expands 100% Bonus Depreciation Eligibility for Aircraft Owners

On January 14, 2026, the Internal Revenue Service (IRS) issued Notice 2026-11, providing critical interim guidance regarding the “One Big Beautiful Bill Act” (OBBBA). This legislation, signed into law in July 2025, permanently reinstated 100% bonus depreciation for qualified property, including business aircraft, acquired and placed in service after January 19, 2025.

According to an industry update published by the National Business Aviation Association (NBAA), the new guidance offers a significant technical clarification that could save aircraft buyers millions in tax liability. Specifically, the guidance addresses the treatment of “binding written contracts,” potentially allowing taxpayers who ordered aircraft under previous, less favorable tax rules to qualify for the full 100% deduction upon delivery.

The “Binding Contract” Trap and the New Solution

Under the Tax Cuts and Jobs Act (TCJA) of 2017, bonus depreciation was scheduled to phase down. For the 2025 tax year, the deduction was set to drop to 40% generally, or 60% for certain aircraft with longer production periods. Many buyers signed binding purchase contracts in 2024 or early 2025 expecting these lower rates.

Typically, tax rules consider property “acquired” on the date a binding written contract is signed. This created a potential trap: buyers who signed contracts before the new law took effect (on or before January 19, 2025) but took delivery afterward might have been locked into the lower phase-down rates.

Relief for Accrual-Basis Taxpayers

The NBAA reports that Notice 2026-11 provides a vital workaround. The guidance clarifies that for accrual-basis taxpayers, a category that includes most corporations and large flight departments, the acquisition can effectively be treated as occurring upon delivery or title transfer.

Consequently, a buyer with a contract from 2024 who took delivery on January 25, 2025, may now claim 100% depreciation rather than the previously expected 40% or 60%. However, the NBAA notes that cash-basis taxpayers face a more difficult hurdle, as they recognize expenses when cash is paid, potentially leaving them subject to older rates if significant payments were made prior to the cutoff.

“Business aircraft owners require a detailed factual analysis in order to present accurate tax returns. There are advanced technical positions that support eligibility for 100% bonus depreciation…”

, David Shannon, Partner at Lewis Brisbois (via NBAA)

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Strategic Elections: When to Take Less

While the return of 100% bonus depreciation is generally welcomed, the IRS guidance also outlines a “Transition Election” allowing taxpayers to opt for the lower rates. According to the research data, taxpayers can choose to apply the 40% rate (or 60% for longer-production aircraft) for the first tax year ending after January 19, 2025.

Tax experts suggest this counterintuitive move may be vital for specific tax planning strategies:

• Preserving Net Operating Losses (NOLs): A full 100% write-off might generate a loss larger than the company can utilize, as NOLs are generally limited to 80% of taxable income.
• Future Rate Arbitrage: If a company anticipates higher corporate tax rates in future years, deferring deductions by taking a smaller percentage now could yield greater long-term savings.
• Credit Preservation: Reducing taxable income to zero might cause other valuable tax credits to expire unused.

AirPro News Analysis

We believe this guidance will have an immediate stabilizing effect on the pre-owned and new aircraft markets in Q1 2026. Throughout late 2025, uncertainty regarding the “binding contract” rule likely caused hesitation among buyers who were unsure if their transactions would qualify for the reinstated OBBBA benefits.

With the IRS confirming that delivery dates can supersede contract dates for accrual-basis taxpayers, we expect a flurry of retroactive tax planning for 2025 returns. Furthermore, the permanent nature of the 100% deduction removes the “use it or lose it” pressure that defined the previous phase-out era, likely leading to more consistent, sustainable demand rather than artificial year-end spikes.

Frequently Asked Questions

What is the effective date for the new 100% bonus depreciation?
The 100% rate applies to qualified property acquired and placed in service after January 19, 2025.

Does this apply to contracts signed in 2024?
Potentially. According to the new guidance, accrual-basis taxpayers who took delivery after January 19, 2025, may qualify for the 100% rate even if the contract was signed earlier. Consultation with a tax professional is required.

Can I still choose the 60% rate?
Yes. The guidance allows for a “Transition Election” to use the lower phase-down rates (40% or 60%) if that benefits your specific tax situation, such as preserving Net Operating Losses.

Sources

• NBAA