How New Changes May Impact Your Farm Business.
Expert views from Joseph Harbert, Certified Public Accountant, Harbert, Haas & Roberts L.C.
With the passing of the One Big Beautiful Bill Act in the summer of 2025 came a roundup of tax changes that will impact the way cooperatives and their members manage their finances in the new year. Here is an overview of key changes.
FIRST-YEAR BONUS DEPRECIATION
Prior to OBBBA, when making equipment or building purchases in 2025, farmers could write off 40% of the purchase price that year, then depreciate the remainder over the item’s IRS class life. The new legislation permanently increases bonus depreciation to 100% of the purchase price, giving more flexibility for tax and financial planning.
Here’s an example of how this could play out for your operation if you were to purchase a tractor for $100,000:
| Annual Depreciation Write-Off | ||
| Year | Old Tax Law | OBBBA |
| Year 1 | $48,574 | $0 |
| Year 2 | $14,694 | $0 |
| Year 3 | $10,494 | $0 |
| Year 4 | $7,494 | $0 |
| Year 5 | $5,358 | $0 |
| Year 6 | $5,352 | $0 |
| Year 7 | $5,358 | $0 |
| Year 8 | $2,676 | $0 |
SECTION 179 EXPENSE ENHANCEMENTS
Updates to Section 179 for equipment purchases now allow farmers to choose the amount they want to write off in the purchase year up to $2.5 million. This enhancement accounts for inflation, giving farmers stronger management options when making large purchases.
QUALIFIED BUSINESS INCOME DEDUCTION
Another one of the biggest changes impacting CFE and its patrons comes in the form of the Qualified Business Income Deduction. Under the new legislation, the 20% qualified business income deduction for sole proprietors and pass-through businesses, including agricultural cooperatives and their patrons, is now permanent. Cooperatives will now continue to be able to take advantage of significant tax savings and reinvest those funds into their business.*
*Since 2016, CFE has accumulated $55.5 million of 199A domestic production tax reductions.
1099-MISC & 1099-NEC REQUIREMENTS
The minimum threshold for 1099 filing has also been updated. In 2026, you will only need to file 1099-MISC and 1099-NEC if payments exceed $2,000, a significant increase from the previous threshold of $600. This will help alleviate paperwork for small amounts of rent and contract labor, while providing tax savings as well.
EXCEPTION FROM LIMIT ON BUSINESS MEAL DEDUCTION
As of January 1, 2026, farmers will no longer be able to deduct meals provided on the farm. This includes tractor cabs and fields, making the change especially prevalent during harvest. In order to deduct meal expenses, the meal must be purchased and served off the business premises.
Aside from these key highlights, there are many additional tax law updates for 2026 that may impact your operation. Talk to your tax professional to be prepared and optimize your farm’s financial management. <<
ABOUT JOSEPH HARBERT
Joseph Harbert, CPA, is co-founder ad partner of Harbert, Haas & Roberts, L.C., a Kansas-based accounting firm. He earned degrees in accounting and business from Newman University and has been a certified public accountant for more than 30 years. Joe serves a wide variety of clients, including many agricultural producers and businesses. Growing up on a diversified farming operation outside a small, rural community, Joe has always had a personal investment in the agriculture industry. He now maintains those ties by helping farmers manage the business side of their operations and secure a successful future for their farms.
