Big tax savings are on the table — here’s how farmers can use Section 179 before year-end. 

The Section 179 deduction for farm equipment is one of the most valuable agricultural tax tools. It allows farmers and ranchers to deduct the full purchase price of qualifying equipment in the year it’s placed in service — instead of depreciating it over several years. Recent tax law changes doubled the deduction limit to $2.5 million and reinstated 100% bonus depreciation, creating a major opportunity to reduce taxable income and reinvest in your operation. 

Let’s take a closer look at the key details of the Section 179 deduction for farm equipment. 

Key things farmers and ranchers should know about Section 179

• Deduction limit: $2.5 million for 2025, with a phase-out starting at $4 million. 

• Applies to new and used equipment: As long as it’s new to your business. 

• Placed in service: Equipment must be ready for use by Dec. 31. 

• Business use: Must be used more than 50% for farming or ranching operations. 

• Bonus depreciation: 100% write-off applies after Section 179 limits are reached. 

How Section 179 works for farm equipment deductions

Section 179 accelerates tax benefits by allowing you to deduct the full cost of qualifying equipment in the year it’s placed in service. For example, buying a $150,000 tractor could save $36,000 in taxes if you’re in the 24% bracket. 

Important rules:

• Deduction cannot exceed taxable income (unused amounts carry forward). 

• Equipment must be purchased and acquired from a non-related party. 

• File IRS Form 4562 with your tax return to claim the deduction. 

What ag equipment qualifies for Section 179

Most tangible property used in farming qualifies, including: 

• Farm machinery: Tractors, combines, sprayers, balers, forage equipment. 

• Vehicles: Trucks over 6,000 lb used primarily for business. 

• Breeding livestock: Animals purchased for breeding purposes. 

• Single-purpose agricultural structures: Milking parlors, grain bins, silos. 

• Farm management software: Off-the-shelf programs for accounting or precision ag. 

• Building improvements: Certain nonresidential improvements like irrigation systems or livestock barns. 

How to use Section 179 deduction for farm equipment

• Purchase or finance qualifying equipment before Dec. 31. 

• Ensure assets are placed in service (ready for use) by year-end. 

• Combine with bonus depreciation for purchases above the $2.5 million limit. 

• Explore ag equipment financing options — you can finance equipment and still deduct the full purchase price this year. 

• Consult your tax advisor for state-specific rules and to optimize deductions. 

Section 179 FAQs for farmers and ranchers

Does Section 179 apply to used equipment?

Yes, as long as it’s new to your business and meets the business-use requirement. 

Can I deduct breeding livestock?

Yes, livestock purchased for breeding purposes qualifies under Section 179. Per the IRS, “livestock held for draft, breeding, or dairy purposes can either be depreciated or included in inventory.”  

What happens if I sell equipment early?

If you sell an asset before the end of its useful life, you may face recapture rules and owe taxes on the deduction taken. 

Do buildings qualify?

Certain single-purpose agricultural structures, like milking parlors or grain bins, qualify. Multiuse buildings generally do not. 

Can I combine Section 179 with bonus depreciation?

Yes. After reaching the Section 179 limit, bonus depreciation allows you to deduct the remaining cost of qualifying assets. 

Bottom line

Recent tax law changes make it easier for farmers to invest in equipment and reduce taxable income immediately. With higher Section 179 limits and restored 100% bonus depreciation, year-end purchases can deliver substantial tax savings — especially when paired with manufacturer promotions and smart financing strategies. Take full advantage of the Section 179 deduction for farm equipment before the year ends. 

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Equipment shown is for illustrative purposes only and may display optional accessories or components specific to their global region. 

Please contact your local Vermeer dealer for more information on machine specifications. 

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