The second-largest for-hire private jet operator, Wheels Up, is the latest to offer members the ability to deposit funds before the end of the year and use them for tax-free flights, in this case, for up to 24 months
Wheels Up is offering members its existing funds program, a new Air Transportation Only fund option that will offer FET-free flying for 24 months after purchase, or the ability to fund both types
The biggest player in jet cards yet to weigh in on how it will address the CARES Act holiday on the 7.5% Federal Excise Tax will announce later today it’s in.
Wheels Up follows NetJets, Directional Aviation’s Flexjet and Sentient Jet, Jet Linx Aviation, FlyExclusive, Nicholas Air, Jets.com, Magellan Jets, and others. You can find an updated list here.
The announcement also applies to existing Wheels Up fund programs purchased after March 27, 2020, when the CARES Act went into effect and the end of the year.
However, Wheels Up is offering a bit of a twist compared to other offers so far. Members have three choices.
Members can purchase an Air Transportation Only (ATO) Fund with restrictions designed to make it compliant with how the IRS may interpret tax law. They can also add more money to an existing fund program with unchanged program rules. Or, they can have two separate funds.
The CARES Act suspended the collection of the 7.5% FET to boost the aviation industry. The taxable event is when a flight is booked and paid for, not the flight’s date. However, the IRS has no official position on jet cards. You can read our full analysis of the IRS’s non-binding internal memo from 2015 that seems to be guiding jet card providers here.
To qualify for the tax-free flights, Wheels Up members need to deposit at least $50,000 (compared to the normal $75,000 entry-level) of new money in an ATO fund before year’s end. They can also move money from an existing fund program purchased after March 27th into an ATO fund so long as they add at least $50,000 in new money.
While there are $100,000, $150,00, $200,000, $300,000, and $400,000 fund levels, there is no limit to how much can be deposited. A deposit of $400,000 would yield $30,000 in tax savings. However, ATO funds have to be used within 24 months of purchase.
Comparing the Wheels Up programs
The key difference between the existing program and the new ATO Fund Program is deposits can only be used for the cost of flights.
The existing program allows you to use funds for catering, ground transportation, deicing fees, and concierge services, as well as discounted tickets on select Delta Air Lines fares.
If you want to have funds in the new ATO program and the normal membership, your rules are based on the amount you have in each fund, not the combined amount.
Larger deposit levels have fewer peak days, lower daily minimums, and shorter booking windows for guaranteed rates.
You can read a program overview here. You can also compare all variables, including its East and West Coast versions, with our easy-to-use QUICK COMPARE spreadsheet when you subscribe to Private Jet Card Comparisons.