Tax code

Tax code proposes write-offs for certain private jet purchases

A tweet from a New York congressional candidate pitting federal tax deductions available to teachers against deductions available to people who can purchase private jets quickly spread, garnering 23,500 retweets and 91,700 likes.

“Teachers can only deduct up to $250 for school supplies on their taxes, but billionaires can deduct the entire cost of a private jet,” wrote Melanie D’Arrigo, a Long Island Democrat running in the 3rd Congressional District. “This is what it looks like when laws are written by millionaires, funded by billionaires. Destroy the system. Raise a Congress of the working class.”

Are the facts in D’Arrigo’s tweet about deductions – which she considers an inequity in the tax code – correct?

The teachers are allowed to deduct $250 for supplies they buy out of pocket for classroom use, though they don’t itemize deductions, according to the Internal Revenue Service. In tax year 2022, this number increases to $300.

As for private jets, the the tax code allows for deduction of total cost of a private plane, new or used, if used primarily for business purposes. However, the deduction provided by the Tax Cuts and Jobs Act 2017 is subject to complicated rules and penalties.

The cost of purchasing a private plane can be deducted by a business that owns the plane, said Howard Gleckman, senior fellow at the Urban Institute’s Urban-Brookings Tax Policy Center. If the plane is only used for business purposes, it can be expensed or depreciated in the year it is acquired, Gleckman said. If the aircraft is used for both business and personal purposes, it can usually be depreciated over a period of several years. If it’s only for personal use, there’s no write-off, experts said.

Lawyers from New York-based Pillsbury who advise wealthy families to inform that the rules are strict and complex. “Given the complexity of the rules and the amounts involved, the year of acquisition, the aircraft should not be used for personal and non-commercial purposes and, to the extent possible, the taxpayer should avoid any possible entertainment or commuting. use.”

Erica York, an economist at the Tax Foundation, a nonprofit that supported the Tax Cuts and Jobs Act and favors a simpler tax code, told us that the costs of doing business, such as physical assets with a useful life of 20 years or less, such as an aircraft, can be deducted in the year of purchase, but they are subject to complicated rules.

The aircraft must be used primarily for commercial purposes in any tax year, and there are entertainment use regulations as well as penalties and what are known as clawback provisions if the requirements to commercial use are not adhered to, York said. When the company sells the plane, it owes depreciation recapture taxes at ordinary tax rates on the gain from the sale of the asset, she said.

The D’Arrigo campaign declined to comment on the filing.

Our decision

D’Arrigo said teachers can deduct up to $250 for school supplies on their taxes, but billionaires can deduct the full cost of a private jet.

The deduction for teachers who pay for class fees with their own money is currently $250.

Billionaires, or others who can afford a private jet, can write off the entire cost of a plane in a single year, although the plane must be used for business purposes.

But not every purchase of a private plane by a billionaire would qualify for a deduction under IRS rules.

We rate this claim largely true.