Deductible Expenses for Farmers

Of course, you always have expenses when running a business. Imagine you’ve collected in a pot all the money you made from farming, and now you have to deduct all the expenses you incurred running the farm. After these deductions, you have a net income, which may be positive or negative. (A deduction is an expense that the taxpayer can lawfully subtract from his or her gross income to arrive at his or her net income.)

Income tax is a progressive tax, which means the more taxpayers earn, the more they pay; those earning lower incomes pay less tax to the IRS. Deductible expenses for farm taxpayers include:

• Advertising
• Bad debts
• Car and truck expenses
• Chemicals
• Conservation
• Money paid for machine work
• Depreciation
• Employee benefits
• Feed
• Fertilizer
• Freight
• Fuel
• Interest
• Insurance
• Legal and professional fees
• Office supplies
• Rent for land vehicles and animals used in farming
• Repairs and maintenance
• Seeds
• Taxes
• Travel and entertainment (up to 50 percent)
• Utilities
• Vet bills

There are several miscellaneous expenses that can also be deducted from farm income, such as certain amortization deductions. Amortization allows you to spread the cost of certain things over several years for tax purposes. If you think you might qualify based on your farming activities, the IRS has a pamphlet (publication 535) at that can tell you more about what is available.