Are you paying more for flights than airlines are paying in taxes? Americans pay hundreds of dollars for flights, and then often hundreds more for baggage, seat selection, and other fees. But as travel costs continue to increase, many of the nation’s largest airlines are paying little or nothing in federal income taxes despite earning billions in U.S. profits.
Corporate tax disclosures reveal that five profitable airlines paid almost nothing in federal income tax last year. In 2025, the effective federal income tax rates of these airlines ranged from 1.07 percent to below zero.
The primary reason: enormous tax breaks dramatically reduced what these companies owed.
Corporations use a variety of tax breaks to reduce their payments but in the case of airlines, the biggest culprit is accelerated depreciation tax breaks. Usually, corporations are allowed to deduct the cost of capital investments, such as airplanes, over the time the asset is in use. But accelerated depreciation allows businesses to deduct the cost of capital assets faster than the assets wear out, effectively lowering their corporate tax liability. The 2017 Trump tax law created an extreme version of this tax break, 100 percent “bonus depreciation,” allowing businesses to write off the entire cost of equipment in the year it is purchased. And the so-called “One Big Beautiful Bill Act” (OBBBA) passed last year extended this provision permanently.
This giveaway offers hugely profitable corporations tax breaks for doing what they were going to do anyway, with the lion’s share of the benefits going to just a handful of the very largest corporations.
In 2025, the pattern among profitable airlines was remarkably consistent.
These low tax rates were not simply the product of tumultuous pandemic years and writing off net operating losses from prior years. Instead, these airlines paid next to nothing in taxes because our tax code allows them to dramatically reduce what they owe even while they report record profits.
- Delta Air Lines earned more than $6 billion in U.S. profits in 2025 but paid only about $10 million in federal income tax. That’s an effective tax rate of just 0.16 percent. Nearly $800 million in depreciation tax breaks led to that outcome.
- Southwest Airlines reported more than $500 million in U.S. profits while receiving a net federal tax rebate, producing a negative effective tax rate. Depreciation deductions accounted for most of the company’s tax reduction.
- United Airlines followed a similar pattern. Despite reporting more than $4.2 billion in U.S. income, it also recorded a negative effective federal tax rate. Company disclosures indicate depreciation deductions, along with interest deduction carry forwards, largely explain the result.
- SkyWest offers another notable example. The company ultimately paid a small amount of federal income tax mostly because executive compensation limits prevented it from reducing its tax bill even further. Without those limits, its effective tax rate would have been even closer to zero, according to the company’s 2025 annual report.
Proponents of accelerated depreciation argue that it’s a way to encourage investment. But research has repeatedly questioned whether these tax breaks generate enough additional investment to justify their cost. Meanwhile, they substantially reduce the taxes owed by some of the largest, most profitable companies.
The airline industry illustrates how these provisions work in practice. Even companies generating billions in profits can reduce their federal income taxes to nearly zero through a tax code that caters to them.
Airlines were far from the only profitable corporations paying incredibly low federal income tax rates in 2025, but they provide one of the clearest examples of how accelerated depreciation continues to shape corporate tax bills.
When five profitable airlines report effective federal tax rates between 1 percent and below zero, the question is not whether they followed the law. They did. The question is whether the law should continue allowing some of the nation’s most profitable companies to reduce their federal income taxes so dramatically.
