What the One Big Beautiful Bill Means for Farmers’ Taxes & Cash Flow
TLDR: The One Big Beautiful Bill brings back full bonus depreciation, expands write-offs for farm buildings, raises Section 179 limits, and improves safety net payments. You will not be penalized for investing in equipment, buildings or farming more acres, but only if your bookkeeping is done correctly.
1. 100% Bonus Depreciation is BACK!
The phase-out is gone, so instead of depreciation over years, if you purchase qualifying equipment after January 19, 2025, you can deduct 100% of the cost in the first year. That can significantly lower taxable income in the year you make the purchase, which helps with cash flow and tax planning. This only works if your purchases are categorized correctly in your books.
What this applies to:
- Tractors
- Combines
- Trucks and farm vehicles
- Other qualifying equipment
2. New Write-Offs for Certain Farm Buildings
In the past, barns, packing sheds and processing spacing took decades to depreciate. Now, some new farm buildings may now qualify for 100% expense, instead of being depreciated over 20+ years. This applies to buildings that have been constructed after January 19, 2025. If your structure qualifies, this change could speed up how quickly you recover that cost on your tax return.
What may qualify:
- New “Qualified Production Property” used directly in production, such as:
- Packing sheds
- Processing facilities
- Grain bins
- Fencing
- Greenhouses
3. Section 179 Limits Increased
The Section 179 spending limit has increased to $2.5 million, up from roughly $1.2 million. If you’re scaling, upgrading equipment or consolidating purchases, you can do that in one year without having to worry about being penalized for major purchases. You’ll have the flexibility to purchase what you need and still get the tax break.
How this impacts your farm
- You can now purchase up to $4 million in equipment before deduction begins to phrase out.
- This is helpful for larger operations to invest without losing tax benefits.
4. Better Treatment for LLCs and S-Corps
If your farm is registered as an LLC or S-Corp, the business was treated as one entity when it came to government payments and limits. Even if multiple owners were working, you were still stuck under a single payment limit. Now, this allows for these businesses to be treated as partnerships, so every active owner gets their own payment limit, instead of it all being lumped together. If more than one person is actively involved in the farm, this can increase the total amount of payments you may qualify for, without changing anything else on the farm.
5. Stronger Farm Safety Net Payments
- Higher Reference Prices: Reference prices, the floor prices that trigger payments, have increased by 10-21% for major crops like corn and soybeans to take into account production costs. Payments may now adjust during moderate price drops, not just full-blown market collapses.
- Updates to Dairy Margin Coverage: It’s not just crop farmers seeing updates. Livestock producers get a win, too. The bill extends the Dairy Margin Coverage program through 2031 and, crucially, allows you to update your production history. You can now use your highest annual milk marketings from 2021, 2022, or 2023. If you’ve expanded your herd in the last few years, your payments will now reflect your current production size rather than outdated numbers.
6. New Base Acres Allowed
For the first time in a decade, farms can add up to 30 million new base acres based on recent planting history (2019-2023). You can finally receive payments on land you’re actively farming today, instead of being tied to outdated acreage records.
What These Changes Mean for You
The changes only matter if your books are clean and up to date. Know what you bought, when you bought it, and who’s actively involved makes a difference, so you’re not missing out. Having a bookkeeper or an accountant who is updated with financial rules takes one more thing off of your plate. That’s why we focus on helping farmers understand how new rulings impact their business.
If you’re looking for tax help, we start with bookkeeping first. We’ll meet with you to see where your farm stands, get everything up to date and make sure that you’re prepared before jumping into tax filing. Our tax service is only for our bookkeeping customers–whether you’re on a monthly, quarterly or semi-annual plan.
Learn more about how we help farmers save time and money with our bookkeeping.