Increase in excise tax for fuel used by private jets

(a) In general (1) Retail excise tax Section 4041(c) of the Internal Revenue Code of 1986 is amended by striking paragraph (3) and inserting the following: (3) Rate of tax The rate of tax imposed by this subsection shall be— (A) with respect to any sale or use for commercial aviation, 4.3 cents per gallon, and (B) with respect to any sale or use which is not described in subparagraph (A), an amount equal to the sum of— (i) 35.9 cents per gallon, plus (ii) $1.641 per gallon. (4) Inflation adjustment In the case of any calendar year beginning after 2026, the dollar amount in paragraph (3)(B)(ii) shall be increased by an amount equal to— (A) such dollar amount, multiplied by (B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting calendar year 2025 for calendar year 2016 in subparagraph (A)(ii) thereof.. (2) Manufacturers excise tax Section 4081(a)(2) of such Code is amended— (A) in subparagraph (C), by striking clause (ii) and inserting the following: (ii) in the case of use for aviation not described in clause (i), an amount equal to the sum of— (I) 35.9 cents per gallon, plus (II) $1.641 per gallon., and (B) by adding at the end the following: (E) Inflation adjustment In the case of any calendar year beginning after 2026, the dollar amount in subparagraph (C)(ii)(II) shall be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting calendar year 2025 for calendar year 2016 in subparagraph (A)(ii) thereof.. (3) Conforming amendments (A) Section 4081(d)(2) of such Code is amended by striking (a)(2)(C)(ii) and inserting (a)(2)(C)(ii)(I). (B) Section 6427(l)(4)(B)(ii)(II) of such Code is amended by striking section 4081(a)(2)(C)(ii) and inserting section 4081(a)(2)(C)(ii)(I). (C) Section 9503(c)(5)(B) of such Code is amended by striking 21.8 cents and inserting 35.9 cents. (b) Refund or credit in cases of reasonable cause Section 6427 of the Internal Revenue Code of 1986 is amended by inserting after subsection (e) the following new subsection: (f) Exception from increase in rate of tax for certain liquids used as fuel in non-Commercial aviation (1) Retail excise tax Except as provided in subsection (k), in the case of any fuel on the sale of which tax was imposed under section 4041(c) for which the rate of tax was determined under paragraph (3)(B) of such section, if the Secretary determines (pursuant to such regulations as are prescribed by the Secretary) that there is reasonable cause that the increase in the rate of tax pursuant to clause (ii) of such paragraph should not apply with respect to such fuel (such as in cases where the fuel was used in an aircraft which was engaged in scientific research, an evacuation from a natural disaster, or assistance in a medical emergency), the Secretary shall pay (without interest) to the ultimate purchaser of such fuel an amount equal to the increase in the amount of the tax imposed on such fuel pursuant to such clause. (2) Manufacturers excise tax Except as provided in subsection (k), in the case of any kerosene on which tax was imposed under section 4081 for which the rate of tax was determined under subsection (a)(2)(C)(ii) of such section, if the Secretary determines (pursuant to such regulations as are prescribed by the Secretary) that there is reasonable cause that the increase in the rate of tax pursuant to subclause (II) of such subsection should not apply with respect to such kerosene (such as in cases where the kerosene was used in an aircraft which was engaged in scientific research, an evacuation from a natural disaster, or assistance in a medical emergency), the Secretary shall pay (without interest) to the ultimate purchaser of such kerosene an amount equal to the increase in the amount of the tax imposed on such kerosene pursuant to such subclause. (3) Termination This subsection shall not apply to any fuel sold or used after January 1, 2028.. (c) Elimination of exemption from air transportation excise tax Section 4261(f) of the Internal Revenue Code of 1986 is amended to read as follows: (f) Exemption for certain uses (1) In general No tax shall be imposed under subsection (a) or (b) on air transportation by helicopter or by fixed-wing aircraft for the purpose of the planting, cultivation, cutting, or transportation of, or caring for, trees. (2) Requirement Paragraph (1) shall apply only if the helicopter or fixed-wing aircraft does not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code, during such use.. (d) Effective date The amendments made by this section shall take effect on January 1, 2026.