Rethink Traditional Tax Strategies

As farm margins tighten heading into year-end, farmers are being urged to rethink traditional tax strategies. NDSU Extension Farm Management Specialist Ron Haugen says lower incomes can change how they approach deductions and expenses. “The income tax code is very favorable for farmers for net operating losses and if that does occur in your situation, you can carry that back two years and get a refund of taxes previously paid.” Haugen notes that negative income years may require reversing some usual tax approaches, such as spreading fertilizer costs over multiple years or adjusting equipment depreciation. “You can also capitalize your repairs. You can actually postpone some of your expenses to the next year to offset some income.” Every operation is different, and Haugen recommends producers work closely with tax advisors to determine the best strategies heading into 2026.