Running a charter
Private jet charter taxes: what brokers need to know
Private jet federal excise tax (FET) and related US fees catch many new brokers on their first domestic quote. This guide explains what to collect, how broker markups affect the tax base, and how to display taxes honestly on proposals.
By Limitless Sky · Last reviewed 2026-10-02 · 7 min read
Part of the private jet broker knowledge base.
Key takeaways
- US charter passengers generally pay 7.5% federal excise tax (FET) on taxable air transportation plus per-segment and international head taxes set in IRS Form 720 instructions.
- On brokered trips, FET is due on the full amount the passenger pays, not only the operator net — agree in writing who collects and remits.
- Show FET, segment fees, and head taxes as named lines on client quotes; do not bury them in a single “taxes and fees” bucket.
- Keep Form 720 support and broker–operator agreements for audits; roles are not always clear in IRS guidance.
- UK and EU VAT rules vary by country and trip type — verify with a tax adviser before quoting cross-border work.
US FET and segment fees — 2026 rates
Federal excise tax on taxable air transportation of persons is 7.5% of the amount paid, plus fixed per-passenger taxes that IRS adjusts periodically. Always confirm the current numbers in IRS Publication 510 and Form 720 instructions before you publish client-facing rates.
For 2026 planning, IRS materials cite a 7.5% FET rate on amounts paid for domestic taxable transportation, a domestic segment fee of $5.30 per passenger per segment, an international head tax of $23.40 per passenger (arrival or departure), and a reduced $11.70 head tax for Alaska/Hawaii departures. These figures come from IRS Publication 510 and the Form 720 instructions; verify them again at quote time.
A segment is generally each takeoff and landing on the itinerary (with exceptions in the IRS rules for certain overflights and international combinations). Brokers should ask operators how they count segments on multi-stop trips so client quotes match remittance.
NBAA and NATA publish broker-oriented FET explainers that align with IRS mechanics but are secondary to the IRS text. Use them for workflow, not as the legal rate source.
Multi-leg itineraries can increase segment counts. When the client adds a stop after quoting, rerun segment fee math before reissuing the invoice.
Brokers outside the US still need US tax lines when the itinerary includes taxable domestic US segments sold to US persons. Coordinate with the operator on which entity registers for Form 720.
Who collects FET when a broker is in the middle
When a broker marks up an operator net rate, the passenger usually pays one total to the broker. FET applies to that total for taxable transportation. IRS guidance on which party must remit on brokered charter has been unclear; contract and documentation matter.
Industry sessions cited by NATA and NBAA illustrate FET computed on the full charter price paid by the passenger, including broker fees, not on the operator’s net alone. Your broker–operator agreement should state who collects FET and segment taxes, who files Form 720, and what happens if the IRS assesses interest.
In 2021, NATA and NBAA asked the IRS for clearer guidance on collection and liability for air charter brokers. Until official guidance is clearer, treat tax collection as a negotiated operational term, not an assumption.
If the broker collects the full fare, the broker needs a process to remit or pass through to the operator with audit trails. If the operator collects, the client quote should still show tax lines the operator will invoice.
Document the agreed role in the broker–operator contract and in your client terms. Ambiguity hurts most during IRS examinations or when an operator invoice arrives without tax broken out.
Card processors and trust accounts do not change FET liability by themselves. Tax treatment follows the underlying transportation contract facts.
FET on the passenger total — worked example
Illustrations help brokers explain why a 7.5% line is larger than 7.5% of the operator net. Label every example as non-tax advice and round for clarity only.
Example — not tax advice: Client pays $50,000 all-in for a US round trip (broker net from operator $42,000, broker fee $8,000). Taxable amount for FET is often the full $50,000, so 7.5% FET is $3,750 before segment fees. Add $5.30 × passengers × segments per IRS rules. Actual segment count and exemptions depend on the itinerary.
Link tax lines on the client quote to the same math you keep internally. Mismatch between proposal and invoice is a common dispute on first trips.
Exemptions brokers should know
Not every flight pays full FET. Brokers should flag possible exemptions to the operator and tax adviser early, not after the client pays.
- Small aircraft exemption: NBAA notes an exemption for certain non-turbojet aircraft under 6,000 lb maximum certificated takeoff weight not operating on an established line — confirm eligibility on each tail.
- International portions may change which taxes apply; head tax rules differ from domestic segment fees.
- Certain flights for ambulance or specific governmental purposes may be excluded — rare in luxury charter but worth asking on mixed missions.
- State or local taxes may apply separately; this page focuses on US federal charter taxes.
Europe and UK VAT — general only
Cross-border European charter quotes may include VAT or similar charges depending on operator state, client location, and whether transport is domestic within an EU country. Brokers cannot guess a single VAT rate for all of Europe.
VAT treatment for charter varies by member state, B2B vs B2C, and whether the broker acts as disclosed agent or principal—confirm with a VAT adviser. UK VAT after Brexit follows UK rules even when the operator is EU-licensed.
Show any VAT or equivalent as a named line with the rate and basis the operator or adviser provides. Do not label US FET as VAT on European trips.
For UK and EU broker setup context, see air charter broker UK & Europe.
Show taxes as named quote lines
Transparent tax lines support Part 295 total-cost disclosures on request and reduce client suspicion. Pair with the quoting guide so conditional costs stay separate from tax.
- Federal excise tax (7.5%) — computed on the stated taxable base.
- Domestic segment fee — per passenger per segment at the IRS rate in effect.
- International head tax — per passenger where applicable.
- VAT or local taxes — only when confirmed for that itinerary.
See how to quote a private jet charter for all-in vs conditional structure, and Part 295 for US disclosure timing.
When the operator quotes net plus taxes at cost, state that explicitly so the client knows the FET line may move if the taxable base changes before departure.
Records that survive an FET review
Keep quote versions, passenger counts, itineraries, and remittance proofs together. If collection roles were unclear at booking, contemporaneous emails still help reconstruct who intended to file Form 720.
Store IRS Publication 510 and Form 720 instruction PDFs for the year of travel with the trip file when you first compute rates. Rates change; your working papers should show which year’s table you used.
Reconcile operator invoices against client invoices monthly so missing tax lines surface before quarter-end filing.
FAQ
Does the broker pay FET on commission only?
Passenger FET is generally on amounts paid for taxable air transportation, which often includes the full client price on brokered charter. Your income tax on commission is separate. Confirm collection responsibility in your operator contract.
What is Form 720 for charter brokers?
IRS Form 720 is the quarterly federal excise tax return where air transportation taxes are reported and paid. Who signs depends on who collects; keep records either way.
Are segment fees the same as FET?
No. FET is a percentage of amounts paid. Segment fees and international head taxes are fixed per-passenger charges listed in Form 720 instructions alongside FET.
Do empty legs avoid FET?
Tax treatment depends on facts and IRS rules, not marketing labels. Ask on each empty-leg quote; do not promise tax-free travel without operator or adviser confirmation.
Should international charters from the US show head tax?
Many US departures or arrivals trigger international head tax per IRS rules. Count passengers and apply the rate in Publication 510 for the year of travel. Alaska and Hawaii reduced rates apply only as described in current IRS instructions.
Do I charge FET on empty positioning legs billed to the client?
Ask the operator and a tax adviser. Taxable transportation facts depend on who pays for what. Do not invent an exemption because the aircraft is empty.
Sources
This guide is general information, not legal or tax advice. Rules change; check the current text and ask a qualified adviser.