Maximizing Farm Tax Savings: What farmers should know about section 179
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Farming is an equipment-heavy business. Tractors, combines, irrigation systems—it all adds up fast. But there’s good news: The U.S. tax code includes a tool that lets farmers deduct the full cost of qualifying equipment purchases upfront instead of waiting years for depreciation. That tool? Section 179.
HOW SECTION 179 WORKS
Instead of slowly writing off equipment over time, Section 179 lets farmers deduct the full purchase price in the year it’s put into service. In 2024, farmers can deduct up to $1.22 million, with a phase-out beginning at $3.05 million in total equipment purchases.
WHAT THAT MEANS FOR FARMERS
- Immediate Tax Savings – Rather than waiting years for small deductions, farmers can reduce taxable income right away and keep more cash in their pockets.
- Encourages Smarter Investments – With a guaranteed tax break, farmers can confidently upgrade equipment, invest in grain storage, or expand infrastructure without second-guessing cash flow.
- Improves Cash Flow – Lower taxes mean more working capital for fuel, seed, payroll, and loan payments.
- Offsets Rising Equipment Costs – With inflation driving up machinery prices, Section 179 helps farmers reinvest in their operations without taking on excessive debt.
- Covers New & Used Equipment – Unlike some tax incentives, Section 179 applies to both new and used qualifying equipment—giving farmers more flexibility in purchasing decisions.
WHAT QUALIFIES FOR SECTION 179?
- Tractors & Combines
- Grain Bins & Silos
- Irrigation Systems
- Farm Vehicles (trucks, ATVs used for farm operations)
- Livestock Equipment
- Farm Management & Accounting Software
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BONUS DEPRECIATION: ANOTHER TOOL TO REDUCE TAXES
On top of Section 179, Bonus Depreciation lets farmers write off even more. In 2024, Bonus Depreciation is set at 60%, meaning additional tax savings beyond the Section 179 deduction.
SMART PLANNING IS THE KEY TO MAXIMIZING SECTION 179
Farmers who plan their equipment purchases before year-end can make a big difference in their tax bill. But the best growers don’t wait until December—they work with their accountant throughout the year to ensure they’re making the right financial moves.
Tax savings shouldn’t be a guessing game. If you’re buying new equipment this year, now is the time to explore how Section 179 can benefit your farm.
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