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Breaking down the proposed fuel tax increases for business aviation

First tax increase since 1993 sets up showdown between industry and the White House

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Release Date
March 22, 2024
Breaking down the proposed fuel tax increases for business aviation

As a part of President Joe Biden’s fiscal year 2025 budget request, the White House has outlined a significant number of new policies aimed at increasing the amount of taxes paid by the wealthiest of Americans — policies that, if enacted, could affect business aviation users operating in the U.S. Starting with the next fiscal year on Oct. 1, 2024, the Biden Administration is proposing to raise the per-gallon tax on jet fuel paid by business aircraft operators from $0.22 to $1.06 per gallon over five years – a nearly four-fold increase for a tax that has not changed since 1993.

The U.S. Department of Transportation, in a statement regarding the President’s budget request, said that the tax increase is targeted at “stabilizing funding for the National Airspace System, which has largely been disproportionately funded by commercial air passengers.” DOT said business aircraft operating in the NAS account for just 0.6% of the dollars collected by the Federal Aviation Administration but make up 7% of the overall traffic handled.

Related: TAC Explains: How are airports funded in the U.S.? 

Today, airline passengers pay a 7.5% tax plus an additional Passenger Facility Charge (PFC) which is capped at $4.50 per passenger per leg and used to fund airport projects. By contrast, the FAA collects revenue from business aircraft only through fuel taxes.

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