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The IRS has updated the standard industry fare level (SIFL) rates (Rev. Rul. 2026-8) used for calculating the imputed income of service providers using employer-provided aircraft from January through June 2026.
An employer is generally required to impute income to a service provider such as an employee, independent contractor, partner or board member (collectively referred to as an “employee”) who uses an employer-provided aircraft for personal purposes. No imputed income is required for an employer-provided flight used for business purposes. These flights are generally excludable from the employee’s income as a working-condition fringe benefit.
If a flight using an employer-provided aircraft is for the employee’s personal use, then the amount includable in an employee’s income is based on either the fair market value of the transportation at fair market charter rates or the SIFL rates. Most personal flights are valued using the SIFL rates, which generally are significantly lower than charter rates.
The SIFL-rate method generally includes the following steps:
- Multiply the number of miles for the flight by the applicable SIFL rates prescribed by the IRS semiannually for the period in which the flight occurred
- Multiply the amount determined in step 1 by the applicable “aircraft multiple” prescribed in the IRS regulations, which is based on the maximum certified takeoff weight of the aircraft and the employee’s control or non-control status
- Add the applicable terminal charge prescribed by the IRS semiannually for the period in which the flight occurred
The SIFL rates used in step 1 and the terminal charge used for step 3 for flights taken from Jan. 1, 2026, to June 30, 2026, are as follows:
- Up to 500 miles — $0.2980 per mile
- 501 to 1,500 miles — $0.2272 per mile
- More than 1,500 miles — $0.2184 per mile
- Terminal Charge — $54.48
The 2026 beginning-of-the-year rates update the 2025 year-end rates and terminal charge (for the period from July 1, 2025, to Dec. 31, 2025) as previously provided in Rev. Rul. 2025-20.
Grant Thornton insight:
In February 2024, the IRS announced plans to begin dozens of audits of aircraft usage by large corporations, large partnerships and high-income individual taxpayers to determine if personal use is treated properly. Taxpayers should assess their contemporaneous supporting documentation to ensure they have adequate records to properly classify and support the deductible use and that they have considered other complex interactions, such as the impact on income to the passengers, as well as other limitation and recapture provisions.
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