Publication 225: Farmer's Tax Guide (2023)

The Farmer's Tax Guide is an official IRS resource explaining how federal tax laws apply to agricultural businesses. It helps farmers accurately report income, deductions, and credits, ultimately simplifying their tax filing process.

What's the Purpose of Farmer's Tax Guide?

This guide provides clear explanations and examples to help you:

  • Understand your tax obligations as a farmer.
  • Accurately calculate your farm income and expenses.
  • Claim eligible deductions and credits.

What Does Publication 225 Cover?

A. Who qualifies: The guide applies to individuals and entities engaged in the business of farming for profit, including livestock, dairy, poultry, fish, fruit, and truck farms, as well as plantations, ranches, ranges, and orchards.

B. Income reporting: The guide also explains how to report income from farming operations, including sales of crops, livestock, and other agricultural products. It also covers government payments and other forms of farm income.

C. Deductions: Publication 225 outlines various deductible expenses farmers can claim, such as farm operating expenses (seeds, fertilizer, feed), depreciation of farm assets (machinery, buildings), interest on farm loans, and soil and water conservation expenses.

D. Special provisions: The guide also covers tax-saving opportunities unique to farmers, such as the Section 179 deduction for qualifying equipment and the 20% deduction for qualified business income.

What's New for 2023?

A. Increased Section 179 Expense Deduction: Deductible limit for qualifying farm equipment has risen to $1,160,000.

B. Updated Standard Mileage Rate: Business mileage rate increased to 65.5 cents per mile.

C. Extension of Qualified Disaster Relief Payments: Exclusions for certain disaster relief payments extended through 2025.

How to File Farmer's Tax?

  • Schedule F: Use this form to report your farm income and expenses.
  • Estimated Tax Payments: Pay estimated taxes quarterly if you expect to owe more than $1,000 in taxes.

For the latest version of Publication 225 or Farmer's Tax Guide, click here.

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