09 Sep Do I Have to Pay Taxes for Private Jet Service?
The franchise tax is charged on virtually all air travel transactions, including private jet service. The taxes are levied on all related costs – including other taxes and crew expenses. Your catering fees are NOT included in the calculation of franchise taxes, meaning for private air travel you can still splurge on the meals and drinks without fear of additional taxes and fees.
The reason for these additional fees and taxes?
The federal government is dependent on a number of tax structures to fund the agencies and facilities that support air travel. While every passenger pays taxes and fees when traveling on commercial aircraft, it is often overlooked and minimal to the overall expense of an airline ticket. These fees, while burdensome, are important to fund air traffic control and airport operations that we all rely on to stay safe and on time.
When chartering private jet service, these taxes and fees may become more apparent and often lead to questions from our travelers – especially when coordinating group and international travel. Learn more and ask questions by calling your Bitlux account representative today.
What To Know About Private Jet Charter Taxes
No matter if you are traveling commercially or through private charter, you can expect to pay Federal Excise Tax, also known as the FET. This payment applies to any air transportation of passengers or cargo within the United States or the 225-mile zone in Canada or Mexico bordering the United States. View some of the Top Private Jet Airports in the USA to find your next private flying destination.
This FET comes in one of two forms:
For recreational, non-commercial flights, you can expect to pay a cents per gallon tax. For chartered planes, you can expect to pay around 19.4 cents per gallon; larger aircraft max out at 21.9 cents per gallon. For commercial airlines, the fuel tax is reduced to 4.4 cents on the gallon.
Percentage or Headcount Taxes
For commercial transportation, you can expect to pay either a percentage or headcount fee or in some cases – both. This means you may pay a percentage of your overall charges for air transportation, currently set at 7.5% of the cost (6.25% if only shipping cargo – no passengers). There is also a segment fee of $4.20 per passenger for domestic travel and a headcount tax for each passenger traveling internationally as well.
Both the IRS and the Federal Aviation Administration (FAA) have purview over what constitutes commercial v. non-commercial operations – and at times, the IRS and FAA can make different determinations, confusing operators and customers alike. However confusing the process may be, finding a carrier that offers inclusive charter services can eliminate the guesswork and provide you with a clear budget for your upcoming flights. Here are a List of Questions to Ask Your Private Jet Company.
Are Any Flights Exempt From Taxes?
While not many exemptions are in place for Federal Excise Tax, there are two clear ways that you may be able to receive a tax break.
- Small Aircraft Exemption: This exemption applies to any non-turbo jet with a maximum takeoff weight of fewer than 6,000 pounds. It is important to note that while FET is not applied to these trips, a segment fee is still in place.
- Uninterrupted International Air Transportation Exemption: this exception applies to any flight that originates in the United States that makes a stop for any reason before departing the country for a destination that would NOT be applicable to owe FETs.
- Flights Over International Water or Land: Additionally, the Alaska/Hawaii headcount tax is reduced and applies only to departures from Alaska/Hawaii for domestic flight segments.
- Helicopter or Fixed Wing Travel: for the exploration of hard minerals, oil, or gas; cultivation and caring for trees (including logging as defined by federal law).
- Miscellaneous exceptions: skydiving, sightseeing flights, forestry, emergency medical services, flight training and water landings.
Exemptions from the Domestic Segment Fee
If your flight is to or from a rural airport, then you do not owe the domestic segment fee. You can find the most up to date list of rural airports on the Department of Transportation’s website, but generally, a rural airport is defined as an airport that has had less than 100,000 passengers departing on commercial flights during any calendar year and is not located within 75 miles of an airport that has 100,000 or more departing passengers.
If you are traveling soon and have questions about the tax implications of your air travel plans, don’t hesitate to contact Bitlux for more information today. We can help you break down every cost for your travel and even suggest alternative options to minimize your tax burden.