2025 Tax Law Changes Farmers Must Know: Exemptions, Deductions & New Opportunities
Tax planning for farmers just got more complicated—and more opportunity-filled. The 2025 tax law changes are among the most sweeping since the TCJA. With new exemptions, revived deductions, and permanent provisions on bonus depreciation, these reforms hit the agricultural sector hard. Whether you’re a senior landowner, buying new equipment, or running a multigenerational operation, now is the time to understand what’s changed and how to act on it.
This post breaks down the most relevant updates for ag producers—no jargon, no fluff, just straight answers from a team that lives and breathes farm tax strategy
Senior Exemption Offers Relief to Older Farmers
A new $6,000 exemption ($12,000 for married filing jointly) is available for those 65 and older.
What You Need to Know:
Kicks in even if you don’t itemize.
Begins phasing out at $75,000 for singles and $150,000 for couples.
Based on AGI—so farm income counts.
Why It Matters: Many senior landowners can now reduce taxable income without restructuring how they file.
Bonus Depreciation Permanently Extended
All qualified farm assets placed in service after January 19, 2025, qualify for 100% bonus depreciation.
Highlights:
Includes tiling, barns, equipment, grafted trees, and more.
Applies even to buildings used for ag production or processing.
No election back to 40%—once you're in, you're in.
Why It Matters: Immediate deductions lower taxable income, helping you reinvest faster.
New Deductions You May Not Have Heard Of
Tip Income Deduction
Deduct up to $25,000 in reported tips per return.
Only for IRS-designated tip-based industries (e.g., restaurants, ride-share).
Requires SSN and proper W-2/1099 reporting.
Farm Impact? Likely none—unless you run a farm-to-table operation or food truck.
Overtime Deduction
Deduct up to $12,500 (single) or $25,000 (married) in overtime wages.
But ag workers? Excluded under current rules.
Await IRS guidance, but proceed with caution.
🚨 Think every farm employee’s overtime counts for a deduction? Think again. Ag labor is currently excluded. Filing incorrectly could trigger penalties—so don’t assume, confirm.
Auto Loan Interest: Yes, There’s a Deduction—With a Catch
Applies to new vehicles under 14,000 lbs GVWR, assembled in the U.S.
Deduction phased out above $100K (single) or $200K (MFJ) MAGI.
VIN must be reported on the return.
No deduction if loan is from a family member.
Why It Matters: Farmers investing in pickups or equipment haulers may qualify—just keep it legit.
Section 199A Made Permanent—With a Twist
20% deduction on Qualified Business Income (QBI) remains.
New minimum deduction: $400 if QBI exceeds $1,000.
Phaseouts for high earners now reduce benefits faster (50% rate vs. previous 25%).
What to Do: Review your entity structure and income mix before year-end.
Trump Accounts & 529 Enhancements
A new “Trump Account” allows $5,000 contributions starting in 2026.
Children born 2024–2028 receive a $1,000 federal deposit.
Restricted to low-fee index funds.
Taxed like traditional IRAs—not capital gains.
Farm Angle: Could be useful for generational wealth planning—but watch for IRS guidance and political fallout over the name.
Opportunity Zones Expanded for Rural Development
Special rules now apply to Qualified Rural Opportunity Funds (QROFs).
Step-up in basis (30%) applies after 10 years.
Best for ag reinvestments: hog barns, machine sheds, grain storage, etc.
Pro Tip: You may be able to set up your own fund. Start planning now for 2026 maps.
📌 Want to know which of these tax changes could quietly impact your farm? The next step is simple: reach out to Farm + AG CPA.
When rules shift, those who understand them early tend to benefit the most. Don't let uncertainty become a missed opportunity. Get clarity. Ask questions. Stay ahead. Our team monitors these tax updates for one reason: to help producers stay profitable and protected.
Contact Farm + AG CPA today—because when it comes to taxes, what you don’t know can cost you.
Have questions about how the new laws apply to your farm? Drop a comment below, or message us directly—we’re here to help.
