Small Aircraft Tax Modification Act of 2016

This bill amends the Internal Revenue Code to expand eligibility for the exemption from the excise tax on the transportation of persons and property by air by: (1) increasing the limit on the maximum certified takeoff weight of eligible aircraft not operated on an established line from 6,000 pounds or less to 12,500 pounds or less; and (2) providing that an aircraft shall not be considered as operated on an established line if it is performing an on-demand operation, as defined by regulation.