By Scout Nelson
Agricultural producers face an important income tax deadline for the 2025 tax year. Farmers and ranchers must file their income tax returns by March 2, 2026, to avoid penalties if they have not made estimated tax payments during the year. This earlier deadline is specific to agricultural producers.
“Producers have until April 15 to file without penalty if they paid their estimated tax by Jan. 15,” says Ron Haugen, farm economist with North Dakota State University Extension.
Haugen explains that many new tax provisions apply to 2025 returns, making tax preparation more complex for producers. The standard deduction increases to $31,500 for married couples filing jointly and $15,750 for single filers. The Social Security wage base rises to $176,100, while the standard mileage rate increases to 70 cents per mile.
Depreciation rules remain important for farm businesses. Producers may use the 200% declining balance method for 3-year, 5-year, 7-year, and 10-year property. For 15-year and 20-year property, the 150% method is still required. Most new agricultural machinery and equipment qualify for a 5-year recovery period, except for grain bins.
Section 179 rules allow producers to deduct up to $2.5 million for new or used machinery and equipment purchased during the tax year, with a phase-out beginning after $4 million in purchases. Bonus depreciation returns to 100% for property placed in service after January 19, 2025, and applies to both new and used equipment.
Income averaging remains available and allows producers to spread income over the prior three years using Schedule J. North Dakota producers may also use Form ND-1FA for state income averaging. Crop insurance payments and government disaster payments may be deferred to the next tax year for cash-basis taxpayers. Livestock producers affected by weather disasters may also defer income under IRS rules.
Tax guidance is available through IRS Publication 225, the “Farmer’s Tax Guide.” Producers are encouraged to consult tax professionals or contact the Internal Revenue Service or their state tax department for assistance.
Any questions about these topics or further updates should be addressed to a tax professional or the IRS at 800-829-1040 or https://www.irs.gov.
For questions about North Dakota income tax, call the North Dakota Tax Department at 877-328-7088 or go to http://www.nd.gov/tax.
Photo Credit: pexels-nataliya-vaitkevich
Categories: North Dakota, Rural Lifestyle