Quick answer: Section 179 lets you write off the full cost of farm equipment — tractors, combines, pivots, trucks — in the year you buy it instead of depreciating it over 5–7 years. The 2024 deduction limit is $1.22 million. The deduction cannot exceed your farm's net taxable income for the year, but unused amounts carry forward to future years.
What Farm Equipment Qualifies
Most tangible business property placed in service during the tax year qualifies for Section 179. For farmers and ranchers that includes:
- Tractors, combines, planters, and tillage equipment
- Irrigation pivots and pumping systems
- Grain bins and handling equipment
- Livestock handling equipment (chutes, scales, feedlots)
- Farm trucks and pickup trucks used for business (may be subject to luxury auto limits depending on weight)
- Single-purpose agricultural structures (hog confinement buildings, greenhouse structures)
Land itself never qualifies. Most farm buildings (barns, shops) depreciate over 20 years under MACRS and may not qualify for full Section 179 treatment, though bonus depreciation rules may apply separately.
Section 179 vs. Bonus Depreciation
Bonus depreciation (currently 60% in 2024, phasing down from 100%) works alongside Section 179. A common strategy: use Section 179 first up to the income limit, then stack bonus depreciation to write off additional amounts. Both deductions reduce your taxable income, but Section 179 is limited to your business income while bonus depreciation can create a net operating loss (NOL) that carries forward. In a high-income year — a good crop year or a land sale — loading up on equipment purchases and using both deductions can significantly reduce your tax bill.
Recapture Risk: Don't Ignore It
If you sell or remove equipment from business use within the same tax year it was expensed, or within 5 years for some property, the IRS can "recapture" the Section 179 deduction as ordinary income. This often catches ranchers off guard when they trade in equipment frequently or take equipment out of service. Keep records of equipment purchases, placed-in-service dates, and disposal dates. Work with your ag CPA to model whether Section 179, bonus depreciation, or standard MACRS depreciation gives you the best long-term tax outcome — not just the best result this year.
Questions About Your Ranch or Farm Situation?
Kyle Ellison is a fourth-generation Texas Panhandle rancher and licensed financial professional in TX, CA, NV, MT, UT, NM.