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Monday, June 24, 2024

Under the CARES Act there is no 7.5% federal excise taxes (FET) on jet cards and jet charter flights purchased before Dec. 31, 2020. This means you can potentially pay for a jet card in 2020 and travel FET free in 2021 and beyond. This article includes some of the leading companies who are offering FET free jet cards for future travel.

CARES Act Relief

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27th, 2020. Under the act, private jet charter flights booked and paid for by Dec. 31, 2020, are exempt from the 7.5% federal excise tax. This tax normally applies to all jet charter and jet card flights.

So there is the potential to save 7.5% if you prepay for your jet card before the end of 2020. But, the savings does not apply to all jet cards or jet memberships, it depends on the program meeting certain criteria listed below. 

Criteria For Saving

John Hoover, a Partner at Holland & Knight and chair of the National Business Aviation Association (NBAA) tax committee suggests that the card or membership deposits need to have the following criteria to be eligible for the saving:

  1. Funds have to be paid for specific amount of flight time, in other words they can’t be just a general deposit, but instead you need to buy hours of time.
  2. The funds cannot be refundable, because this suggests the money is just a deposit.
  3. There should be a limit to the time period in which the funds can be used.

Companies Offering Savings

Many of the leading jet card companies are offering future FET savings by buying their cards in 2020. Some of these companies have created special terms in their card agreements to make sure they meet the criteria. For instance, some of the companies normally offer full refundability of any balance, but are now offering a non-refundable option to save on the FET.

The list of jet card providers offering FET free cards includes: Air Partner, AirShare, Clay Lacy, Dumont Aviation, Flexjet, flyExclusive, Jet Linx, Magellan Jets, NetJets, Nicholas Air and Sentient Jet.

As with any jet card purchase, make sure you buy the amount of hours you need, in the type of plane that is most appropriate for your missions. So do some future travel planning beforehand. This is especially true when these balances are non-refundable (although most companies will let you roll over any unused balance into a new purchase).

Note, the COVID-19 relief bill passed in December 2020 did not extend the 31st December deadline.