Just like purchasing a commercial airline ticket, you also need to pay taxes when flying with a private jet charter in the United States. That’s why you may have noticed when booking or getting a quote from a charter company, sometimes there are taxes and fees under your charter price that are added to the total price. In other instances, taxes may be indicated separately on a quote or invoice.
These taxes apply to every private jet charter flight in the United States. In some cases, you'll also have to pay taxes on flights into and from areas in Mexico and Canada that are within 225 miles of the United States border.
But what exactly are these taxes? Or, simply put, what taxes are you paying? We'll look at these taxes in more detail.
Types of Taxes of Private Jet Charter
Now that you know that you'll pay taxes on charter flights within the United States, let's look at the different types of taxes you might need to pay.
Federal Excise Tax (FET)
Federal Excise Tax or FET is charged on any amount paid for air transportation, irrespective of whether it's for passengers or property. It's calculated on the entire cost of the charter, so it also includes costs like other taxes and flight time expenses like repositioning time, landing fees, local taxes, and crew expenses.
The FET rate has remained constant for many years because it's not adjusted for inflation. As a result, the current rate for FET is 7.5% for the transportation of passengers and 6.25% for the transportation of property.
Keep in mind, though, that passenger convenience services like catering costs and ground transportation are not subject to the payment of FET.
Segment tax is a tax paid per flight segment, per passenger. Here, a segment is defined as one takeoff and one landing. Unlike FET, segment tax has increased over the years and is currently at a level of $4.30 per passenger.
This means that, for example, on a flight from New York to Orlando, every passenger on the flight will pay $4.50 in respect of segment tax.
International Head Tax
International flights departing from or arriving in the United States do not need to pay Federal Excise Tax. Instead, they are charged a head tax. Currently, the head tax amounts to $19.10 per passenger.
It’s important to note that flights to US possessions like Puerto Rico and the US Virgin Islands also need to pay this tax. However, flights from these possessions to international destinations are not liable for the tax.
Hawaii/Alaska Head Tax
Alaska and Hawaii have different head taxes compared to other international flights. As such, flights departing from either of these states are taxed at $9.60 per passenger.
When Do You Have To Pay These Taxes?
Now that you know what the different taxes are, we'll look at the specific circumstances when you'll be liable to pay these taxes.
Generally, when you transport passengers or property by air within the United States or the 225-mile zone in Canada and Mexico, you'll be liable for a combination of FET and segment taxes. This 225-mile zone is the part of Canada or Mexico that is equal to or less than 225 miles from the nearest United States border.
Depending on different circumstances, you’ll need to pay different taxes:
Any flight leg that begins and ends in the United States or the 225-mile zone is subject to both FET and segment taxes.
Any international flight leg that begins or ends in the United States or the 225-mile zone is subject to international head taxes.
Any flight that departs from Alaska or Hawaii is liable for the Hawaii/Alaska head tax.
Exemptions From Paying FET and Segment Tax
From the above, it's clear that FET and segment tax are payable on almost any domestic flight in the United States. However, there are certain exemptions:
Small aircraft exemption. Any transportation by a non-turbojet aircraft that has a maximum certified takeoff weight of 6000 pounds is exempt from FET. It's important to note that this exemption is only valid if the aircraft is not operated on an established line.
Uninterrupted international air transportation. Flights that take off in the United States and make an interim stop before departing the United States for an international destination are not subject to FET. This exemption only applies when the interval between the arrival and departure of the aircraft at the interim stop is less than 12 hours.
Flights over international waters or international land. Certain flights involve flying over international waters or land. In these cases, the part of the flight over this area is exempt from FET.
Open jaw transportation. Open jaw transportation happens when an international flight departs from the United States or the 225-miles zone and returns to the United States or the 225-miles zone but to a different location than the original departure point. It also happens when a flight takes off to a specified destination from a specific point of departure and returns to the same point from another destination. In these cases, FET will not be applicable. It is, however, important to keep in mind that where both points of the open jaw are within the United States or the 225-miles zone, the distance between the points must not exceed the distance of the shorter segment.
Apart from the above specific exclusions, there are also certain other exclusions like:
Emergency medical services
Helicopter transportation of individuals, equipment, or supplies that is used for the exploration of minerals, oil, or gas.
Helicopter or fixed-wing flights for planting, cultivating, cutting, or transporting trees.
In respect of segment taxes, they will not apply when a flight leg is to or from a rural airport. In this case, a rural airport is an airport that has had less than 100,000 passengers depart on commercial flights during any calendar year.
Now you have known all the types of taxes applicable to your private jet charter in the U.S. and when you need to pay them. To sum up, except in certain exceptional circumstances, you’ll always have to pay a combination of FET and segment taxes for domestic flights. If you are chartering a private jet with Airacer, you don’t need to worry about any of these taxes and fees. While some flight providers may leave taxes and fees out to make you feel you get a cheaper flight, our formal quote will include all applicable taxes and fees precisely. Request a quote now for your next trip!
Tel: +1 800-213-5051