A group of senators criticized the Treasury Department for refusing to amend the Standard Industry Fare Level (SIFL) valuation rules for personal flights on corporate aircraft. The lawmakers contend the rules create a tax loophole for wealthy individuals.
How the SIFL valuation method works
Under IRC § 61, employees must include the value of personal flights on employer-provided aircraft in their gross income, as this constitutes a fringe benefit. The regulations provide two methods for valuing these flights: the flight’s fair market charter cost or a formula-based method known as the Standard Industry Fare Level (SIFL) method.
The SIFL valuation formula, detailed in Reg. § 1.61-21(g), calculates the value of a flight by multiplying the distance traveled by a cents-per-mile rate, which is then multiplied by an aircraft weight multiple. A terminal charge is added to this amount.
For the first half of 2026, Rev. Rul. 2026-8 set the terminal charge at $54.48 and the mileage rates at $0.2980 per mile for the first 500 miles, $0.2272 for miles between 501 and 1,500, and $0.2184 for miles over 1,500.
However, a February 2025 analysis from the Joint Committee on Taxation (JCT) highlighted a significant gap between SIFL valuations and market rates. The JCT found that a flight from New York City to Washington, D.C., with a fair market value of at least $4,500 would be valued at just $235.77 under the SIFL method. The lawmakers say this discrepancy could result in $1,577 to $1,804 less in taxes for a high-income executive.
Lawmakers criticize ‘tax giveaway for the wealthy’
Senators Sheldon Whitehouse (D-RI), Elizabeth Warren (D-MA), Chris Van Hollen (D-MD), Ed Markey (D-MA), and Bernie Sanders (I-VT) had urged Treasury to close the SIFL loophole in a July 24 letter.
And they argue the loophole is compounded by tax breaks for purchasing corporate jets, specifically 100% percent bonus depreciation. While bonus depreciation was phased down under the 2017 Tax Cuts and Jobs Act beginning in 2022, it was brought back up to 100% under the 2025 One Big Beautiful Bill Act.
The lawmakers note an additional JCT analysis showing an increased in estimated sales revenue from private jets delivered in the United States from 2018 to 2022, before bonus depreciation phase-down began.
Treasury defends SIFL as consistent, less burdensome
However, Treasury defended current SIFL rules in an August 17 letter. The department said that requiring a precise fair-market valuation for every flight would be “administratively burdensome for taxpayers and the Internal Revenue Service.”
Treasury noted that the SIFL method was finalized in 1989 to create a standardized valuation method that would “produce consistent results among taxpayers and eliminate the burden of obtaining individualized appraisals.”
The department added that the semi-annual updates to the SIFL cents-per-mile rates, which are calculated by the Department of Transportation and published by the IRS in revenue rulings, are intended to “take into account current market conditions in calculating the value of employer-provided flights.” The department maintained that the current formula and update process appropriately address valuation for these fringe benefits.
Senators contest burden
The lawmakers decried Treasury’s response in a September 3 press release. They contest the department’s assertions that the current SIFL method is meant to provide consistency, calling out “the staggering gap between the SIFL rate and the actual charter market rates.”
“The Trump administration now says it would be ‘burdensome’ to close the private jet tax loophole because this is an administration hell-bent on using the powers of government to make the ultra-rich even richer,” said Whitehouse said.
For more on employer-provided flights as a fringe benefit, see Checkpoint’s Federal Tax Coordinator 2d ¶ H-2301.
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