Aircraft Terminal Charge and SIFL Mileage Rates Reduced for First Half of 2014

Author: Rena Pirsos, XpertHR Legal Editor

February 25, 2014

The US Department of Transportation has released the terminal charge and standard industry fare level (SIFL) mileage rates for the first half of 2014. These rates are revised semiannually and are used by the Internal Revenue Service to determine the value of noncommercial flights on employer-provided aircraft under the aircraft valuation method for withholding tax purposes. All the rates have been reduced from those in effect during the second half of 2013.

The following rates apply for January 1, 2014 through June 30, 2014:

  • The terminal charge is $45.98 (was $48.53 for the second half of 2013).
  • The SIFL rates are:
    • $0.2515 per mile for the first 500 miles (was $0.2654 for the second half of 2013);
    • $0.1918 per mile for miles 501 to 1,500 (was $0.2024 for the second half of 2013); and
    • $0.1844 per mile for miles over 1,500 (was $0.1946 for the second half of 2013).

Under the Internal Revenue Code, the value of an employee's business use of employer-provided noncommercial aircraft is a tax-free working condition fringe benefit, but the value of any personal use is subject to federal income and employment tax (Social Security and Medicare tax) withholding and to federal unemployment tax. If an employee combines a business trip with a personal trip, the employer must withhold on the value of the personal portion of the trip.

Depending on the circumstances of the trip, employers may either use a general valuation method or the special aircraft valuation method, under which a flight's value is determined using the SIFL formula. Employers multiply the SIFL cents-per-mile rate for the period of the flight by an aircraft multiple and then add the terminal charge. The aircraft multiple is based on an aircraft's maximum certified take-off weight and differs depending on whether the employee is a control employee.