Congress set to extend aviation taxes

The House passed a short-term re-authorization of the Federal Aviation Administration that would extend aviation taxes through March 8. The taxes are currently scheduled to expire on Dec. 31 and include the following:

• Three-cents-per-gallon excise tax on noncommercial aviation gasoline
• Eight-cents-per-gallon excise tax on noncommercial aviation kerosene
• 5% tax on the base ticket price
• $4.80-per-person domestic segment tax for a single takeoff and landing (indexed for inflation)
• $21.10-per-person international travel facilities tax for flights that begin or end in the U.S. ($10.60 for a flight that begins or ends in Alaska or Hawaii, indexed for inflation)
• 25% tax on the amount paid for transporting property by air

The Senate is expected to take up and pass the legislation before leaving for the year, but Sen. Michael Bennet, D-Colo., is currently blocking action and said he would continue to do so until Congress approves a supplemental aid package to Ukraine.

The short-term passage of a ‘clean’ FAA bill robs tax writers of a potential vehicle to use to attach a tax extenders deal. A tax deal in 2023 continues to look unlikely, with tax writers focusing instead on using the spending vehicles that will be due in January or February.

The March 2024 expiration of FAA authorization could provide another vehicle for a tax extenders agreement, but March is already well into the filing season and if lawmakers can reach an agreement by January or February, then the process may be dead.