Paula Bindert is a CPA with more than 27 years of public accounting experience. Prior to joining First National Bank, she built and led a successful CPA firm in Canton.

Fall has always been my favorite time of the year, not only for the pleasant cooler temperatures and spectacular change of colors, but also for the opportunity at our CPA firm to plan with our farm tax clients once the harvest was complete.

With a proactive approach to tax planning, farmers can better manage income and navigate complex tax law provisions.

In the spirit of another harvest season come and gone, I’ve outlined a few tips from the technical side of those farm tax planning conversations.

Tax planning helps farmers manage the challenges of fluctuating net income.

Since most tax-related decisions need to be made prior to year-end, a proactive approach allows time to meet with your tax professional, to evaluate income and expenses, to formulate a plan, and to implement those adjustments before the end of the calendar year.

When anticipated net farm income is high, planning considerations you may find advantageous include:

• a deferred payment contract to delay payment for crops or livestock sold until the next tax year
• the election to defer eligible crop insurance proceeds
• accelerating expenses by making prepayments (subject to certain limitations) for next year’s supplies, seed, fertilizer, and feed in order to deduct the expense in the current year
• capital expenditures to take advantage of Section 179 and bonus depreciation provisions

Tax planning helps farmers navigate complex and ever-changing tax law provisions.

Tax law for farmers is unique, covering specific rules for estimated tax payments, income calculation methods, expenses, credits, and depreciation.

New agricultural tax provisions recently signed into law in the One Big Beautiful Bill Act:

• make the 20% qualified business income deduction permanent,
• permanently extend 100% bonus depreciation for qualified property acquired after January 19, 2025,
• expand 100% bonus depreciation to qualified production property,
• raise the Section 179 deduction limit for 2025 to $2.5 million for equipment purchases up to $4 million, and
• allow the capital gains tax from qualified farmland sales to a qualified farmer to be paid in four equal annual installments.

Now more than ever before, year-end farm tax planning with a professional who specializes in agricultural taxation is essential.

Together, you can determine the timing of income, expenses, and capital expenditures; identify new opportunities available; and develop an overall strategic plan to optimize tax.

If you’re looking for someone to partner with your tax professional, our experienced Wealth Management team can help with any financial planning needs; simply send us a note!

Any comments, insights, or strategies discussed in this article are intended to be general in nature and, therefore, may not be suitable for you and your situation. Tax laws are complex and may be subject to future changes or interpretations. Before acting on anything written here, please consult with your tax advisor to determine how these provisions may affect your specific situation.