Agribusiness Update: Tax Breaks for Farm Equipment

What changed:

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The OBBBA gives farms and rural businesses some tax relief:

100% bonus depreciation: Farmers can now deduct 100% of the cost of certain new or used farm equipment in the year it’s placed into service rather than using a multi-year depreciation method. That means lower taxes now instead of later.

Limits on business losses: There are new permanent limits on how much a business owner can use losses to offset other income in a single year, such as wages or investment income. The “excess business loss” is the excess of the taxpayer’s aggregate deductions from trades or businesses of the taxpayer over the sum of the taxpayer’s aggregate gross income or gain attributable to such trades or businesses of the taxpayer plus a threshold amount.

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Planning equipment purchases or considering entity changes? Contact LDM to coordinate tax strategy with your capital plan.