Navigating Tax Advantages When Placing Your Aircraft on a Part 135 Certificate

Introduction: Why Part 135 Matters for High‑Net‑Worth Individuals and Family Offices

Texas is home to a rapidly growing population of individuals and family offices who view business aviation as a strategic tool. Many begin with operations under Part 91, where the aircraft is used solely for the owner and invited guests. As their usage grows, they often hear about the benefits of placing the aircraft on a Part 135 air carrier certificate. This move allows the jet to be used for charter flights when the owner is not flying, creating revenue and unlocking tax advantages. There are regulatory and cost considerations, but properly structuring operations can provide meaningful tax savings.

Sales and Use Tax Relief: Texas and Florida Compared

One of the biggest tax motivations for putting your jet on a Part 135 certificate in Texas is the sales tax exemption. Under Texas law, aircraft purchased by certificated air carriers (including Part 135 operators) are exempt from state sales tax This exemption applies not only to aircraft purchases but also to lease payments and charter flights because the state treats chartering an aircraft with a crew as a nontaxable transportation service. In practice, an owner can lease the aircraft to a Part 135 operator and avoid paying Texas sales tax on lease payments while still being able to use the jet for personal and business travel.

Florida provides an instructive comparison. The Sunshine State imposes a six‑percent sales tax on aircraft sold, delivered or stored in the state, with optional county surcharges. However, Florida offers exemptions for aircraft sold to non‑residents who remove the aircraft within a prescribed period and for aircraft over 15,000 pounds used by common carriers Florida also exempts aircraft from property tax altogether; the state constitution treats aircraft registration fees as a replacement for ad valorem taxes. While Florida’s sales tax system is more onerous than Texas for most owners, the absence of property tax offsets part of that cost.

Lowering Property Taxes in Texas through the Commercial Aircraft Formula

Texas counties assess annual property tax on business aircraft based on their assessed value. The Texas Property Tax Code includes a special “commercial aircraft” valuation formula for aircraft primarily used in commercial air carrier service. Because Part 135 operations are considered commercial air carrier service, an aircraft that logs most of its miles on charter flights can be valued under this formula rather than the standard business aircraft valuation. The commercial formula substantially reduces the assessed value, leading to lower property taxes. It is crucial that the Part 135 certificate holder—not just a lessee—actually operates the aircraft on charter flights; merely leasing to a Part 135 operator without significant commercial use will not qualify.

This advantage is unique to Texas, as Florida does not levy aircraft property tax. For owners domiciled in Texas, the difference between paying annual property tax under the business aircraft formula versus the commercial formula can exceed three percent of the assessed value. Therefore, shifting the majority of flight activity to charter under Part 135 can materially reduce the aircraft’s recurring tax burden.

Federal Excise Tax and the New FET Exemption

Another cost consideration is the federal excise tax (FET) on charter flights, currently 7.5 percent of the ticket price plus segment fees. Historically, FET applied to all Part 135 flights, including charter flights for the aircraft’s owner. This made charter less attractive because owners were trading Texas sales tax for FET. The IRS clarified rules in 2021 that exempt Part 135 flights paid for by the aircraft owner or lessee from FET. In effect, when the owner pays for a charter flight on its own aircraft under Part 135, the flight is treated like a Part 91 flight and is not subject to FET. This change significantly reduces the tax cost of chartering your own aircraft under Part 135 and makes the Texas sales tax exemption more compelling.

Capitalizing on Bonus Depreciation and New Federal Incentives

Federal tax policy also shapes the Part 135 decision. The Tax Cuts and Jobs Act introduced 100 percent bonus depreciation for business aircraft, allowing owners to write off the entire purchase price in the first year. However, this benefit was scheduled to phase out by 2027. In 2025, the One Big Beautiful Bill Act permanently reinstated 100 percent bonus depreciation for qualified property placed in service after January 19, 2025. The law covers new and used aircraft and allows businesses to deduct the full cost of a jet in the year it is placed in service, provided it is used more than fifty percent for qualified business purposes. To qualify, at least twenty‑five percent of use must be for unrelated‑party business flights, and more than fifty percent of total use must be business. Placing a jet on charter helps meet these thresholds by increasing business flight activity and demonstrating that the aircraft is held out to the general public for hire.

For Texas owners, combining bonus depreciation with the state sales tax exemption can yield substantial upfront savings. Florida owners can also benefit from the federal depreciation incentive, though they still face state sales tax unless they qualify for non‑resident exemptions. In either state, careful recordkeeping is essential to support business use percentages, and owners should work with tax advisors to document the business purpose of each flight.

Higher Operating Costs and Compliance Considerations

While the tax benefits are appealing, operating under Part 135 introduces higher operating costs and regulatory oversight. Charter operators must hold an air carrier certificate and meet stringent pilot qualifications, including minimum flight hours, recurrent training, and second‑class medical certificates. Maintenance standards are more rigorous: jets must undergo 100‑hour inspections, comply with specific maintenance programs, and use certified repair stations. Because charter aircraft accrue hours more quickly than private jets, components reach their life limits sooner, and maintenance reserves must be set aside accordingly. Insurance, dispatch, recordkeeping, and compliance audits add further expenses.

These extra costs mean that Part 135 is not a perfect fit for every owner. If a family or family office flies only a handful of hours each year and prefers to keep the jet private, the economics rarely justify the compliance and management burden. On the other hand, many aircraft fly a healthy number of owner trips but spend long stretches parked between them. In such situations, operating the jet under a Part 135 certificate can convert idle time into charter hours. That revenue, combined with the tax advantages, often outweighs the added expenses. The key is to structure operations so that a significant share of total flight time is dedicated to charter flights, and to work with a reputable Part 135 operator who can keep the airplane flying when the owner is not.

Recordkeeping and Compliance: Protecting Your Deductions

The Internal Revenue Service places heightened scrutiny on deductions for business aircraft. Taxpayers must maintain detailed logs showing the time, destination, business purpose, and passenger identity for each flight. Approximations are not allowed; the IRS expects contemporaneous records that tie each flight to a legitimate business purpose. When an aircraft is operated under a Part 135 certificate, record-keeping is often more comprehensive because charter operators maintain flight logs, passenger manifests, and maintenance records for regulatory compliance. This structure can help owners defend business‑use percentages and bonus depreciation claims in the event of an audit.

Conclusion: Balancing Opportunity and Complexity

For Texas individuals and family offices, placing a jet on a Part 135 certificate can unlock multiple tax benefits: exemption from state sales tax, a lower property tax valuation, a recent federal excise tax exemption for owner flights, and renewed 100 percent bonus depreciation. By offering the aircraft for charter, owners can generate revenue while meeting the business‑use tests required to secure these incentives. Florida offers its own advantages, namely, no property tax on aircraft, but Texas’s combination of sales tax and property tax benefits makes Part 135 particularly attractive for domiciled owners.

This decision is not purely financial. Part 135 brings heightened maintenance, training, and compliance costs, and owners must be comfortable making their aircraft available to strangers. However, when executed correctly with experienced advisors, the tax advantages and incremental charter revenue can outweigh the added complexity. As with any significant financial decision, consult aviation tax professionals to tailor a structure that meets both regulatory requirements and your personal goals.