According to an analysis of the 5,593 pages of the House amendment to the Senate amendment of H.R. 133, or the Consolidated Appropriations Act, 2021, there’s good news and bad news.
First, the good news. If you like to drink beer or wine, excise tax reductions will be extended through the end of 2021 when the bill is approved. For private jet flyers, the holiday is over. It appears on Jan. 1, 2021, the 7.5% tax will be reinstated. So good news for beer and wine drinkers. Bad news if you want to save money on your private flights.
That means if you want to save FET, it’s time to put on your shopping shoes. More than a dozen jet card providers have been pitching funds deposited this year that will entitle you to tax-free flights. In some cases, it is as long as those funds last. In others, until your card expires.
If you book charter flights on-demand for 2021 before midnight on New Year’s Eve, your flights will also be sans the 7.5% surcharge.
Whether it makes sense or not to deposit jet card funds before year’s end will depend on your flying needs. And even more so, finding the right program. Buying in haste can easily cost more money than you save, as we previously outlined.
It’s important to understand that the Internal Revenue Service has not issued a formal position on tax-free jet cards. You can read our report here on what the IRS told us.
Implemented as part of the wide-ranging CARES Act, FET collections were suspended at the end of March. The 7.5% tariff applies to flights within the Continental U.S. It is also charged for flights starting or ending within 200 nautical miles of the northern and southern borders.
An official of the National Business Aviation Association had predicted the tax holiday would not be extended.
“With the way the current stimulus discussions are progressing, I think the chances of the FET suspension being included at the last minute are low. I just don’t think there is an appetite for engaging in tax policy debates after the fallout from some of the tax changes made through the CARES Act,” Scott O’Brien, senior director of government affairs at the NBAA, told us last week.
At the time he noted, “There is no discussion on Capitol Hill that I am aware of to extend the FET suspension beyond the end of this year. This round of COVID-19 relief negotiations that has stretched on for many months has really not addressed tax policy as was done in the CARES Act.”
You can download the full 5,593 pages of H.R. 133 Consolidated Appropriations Act, 2021 below: