As the year winds down, now’s the time to take a good look at your equipment and your books. Smart year-end purchases can make a big difference come tax season — and we’re here to help you understand how. Smart investments made before December 31 can make a big difference at tax time, especially when it comes to farm equipment purchases, parts, and service expenses.
What’s Section 179?
The section 179 deduction lets farmers deduct the full purchase price of qualifying new or used farm equipment bought or financed before December 31. THat means you can write off the entire cost of a tractor, baler, sprayer, or combine this tax year… putting more money back into your operation.
Example: Buy a $150,000 tractor before year-end, and you could deduct the full $150,000 on your 2025 taxes. That’s major farm equipment tax savings.
The deduction is one of the best ways for farmers to upgrade machinery while reducing taxable income in the same year.
Don’t Forget Bonus Depreciation
On top of Section 179, bonus depreciation allows farms to deduct a large percentage of an equipment purchase in the first year. Even after hitting your Section 179 limits, bonus depreciation offers another layer of tax relief for agriculture equipment purchases.
Parts and Service Count Too
Year end parts and service purchases can also reduce your taxable income. Any parts bought for equipment maintenance before December 31 are typically deductible as ordinary business expenses. The same goes for repairs and service work completed before the end of the year.
Example: Spend $10,000 on parts in December — that $10,000 can go straight toward lowering your taxable income for the year.
So whether you’re replacing worn tillage blades, rebuilding a gearbox, or scheduling off season combine maintenance, those investments pay off twice. Once in performance and again at tax time.
Why Buy Before December 31?
Buying or servicing your equipment before the end of the year means you’ll:
- Take advantage of Section 179 and bonus depreciation before limits reset
- Reduce taxable income fore 2025
- Start next season with dependable, ready-to-work equipment
- Keep your equipment running strong
The Bottom Line
Buying, repairing, or maintaining equipment before the year ends doesn’t just set you up for a strong start next season — it can also help reduce your tax burden this one.
If you’ve been thinking about upgrading or getting ahead on maintenance, now’s the time to do it.
Talk with your accountant and stop by your local Parallel Ag store to see what equipment, parts, or service options make sense for you before the clock runs out on 2025.
**Please note: Parallel Ag is providing this guide for informational purposes only. We are not tax advisors. Customers should consult their own tax advisor or financial professional to discuss their specific tax situation and ensure they are making the best decisions for their individual needs.
