Maximizing Farm Tax Savings: What farmers should know about section 179

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 businesses deduct the full cost of qualifying equipment purchases upfront instead of waiting years for depreciation. That tool? Section 179.

How Section 179 works for farms

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.

Example: If a farmer buys a $150,000 tractor in 2024, Section 179 allows them to deduct the full $150,000 from their taxable income. If they’re in the 24% tax bracket, that’s $36,000 in potential tax savings—immediately.

What that means for farmers

Section 179 isn’t just a line item in the tax code—it’s a powerful tool for managing farm taxes strategically. By allowing farmers to deduct the full cost of qualifying equipment upfront, this provision turns large purchases into immediate financial advantages. Here’s how Section 179 can directly impact your bottom line and strengthen your operation’s financial health.

• 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 farm purchases qualify for Section 179?

Before taking advantage of Section 179, it’s important to understand the basic eligibility rules. Not every purchase qualifies automatically—farmer owners need to meet specific use, ownership, and timing requirements to claim the deduction. Here’s what you need to know to stay compliant and maximize your savings.

• Tractors & Combines
• Grain Bins & Silos
• Irrigation Systems
• Farm Vehicles (trucks, ATVs used for farm operations)
• Livestock Equipment
• Farm Management & Accounting Software

Additional eligibilty requirements:

• Equipment must be used more than 50% for farming.
• Must be purchased, not leased (with exceptions).
• Equipment must be put into service by December 31 of the tax year.

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.