! purposes and you — 2025 Inst 1040 (Schedule F) (PDF)

CAUTION Schedule 1-A (Form 1040) for the vehicle loan interest

allocable to your personal use, then you can’t claim a deduction for that same interest on Schedule F. See Schedule 1-A (Form 1040) and its instructions for more information.

Unless you obtain IRS consent, you must make this election for the first tax year in which you engage in a farming business involving the production of property subject to the capitalization rules. You can’t revoke this election without IRS consent.

Special rules. If you make the election to deduct preproductive expenses for plants:

Any gain you realize when disposing of the plants is ordinary income up to the amount of the preproductive expenses you deducted, and
The alternative depreciation rules apply to property placed in service in any tax year your election is in effect.

Line 12 Deductible conservation expenses are generally those that are paid to conserve soil and water for land used in farming, to prevent erosion of land used for farming, or for endangered species recovery. These expenses include (but aren’t limited to) costs for the following.

For details, see Uniform Capitalization Rules in chapter 6 of Pub. 225.

Prepaid farm supplies. In most cases, if you use the cash method of accounting and your prepaid farm supplies are more than 50% of your other deductible farm expenses, your deduction for those supplies may be limited. Prepaid farm supplies include expenses for feed, seed, fertilizer, and similar farm supplies not used or consumed during the year.

They also include the cost of poultry that would be allowable as a deduction in a later tax year if you were to:

The eradication of brush.
The planting of windbreaks.
The achievement of site-specific management actions recommended in recovery plans approved pursuant to the Endangered Species Act of 1973.
The treatment or movement of earth, such as leveling, grading, conditioning, terracing, contour furrowing, and the restoration of soil fertility.
The construction, control, and protection of diversion channels, drainage ditches, irrigation ditches, earthen dams, watercourses, outlets, and ponds.

Capitalize the cost of poultry bought for use in your farming business and deduct it ratably over the lesser of 12 months or the useful life of the poultry, and
Deduct the cost of poultry bought for resale in the year you sell or otherwise dispose of it.

If the limit applies, you can deduct prepaid farm supplies that don’t exceed 50% of your other deductible farm expenses in the year of payment. You can deduct the excess only in the year you use or consume the supplies (other than poultry, which is deductible, as explained above). For details and exceptions to these rules, see chapter 4 of Pub. 225.

Whether or not this 50% limit applies, your expenses for livestock feed paid during the year but consumed in a later year may be subject to the rules explained in the line 16 instructions.

Line 10 You can deduct the actual expenses of operating your car or truck or take the standard mileage rate. You must use actual expenses if you used five or more vehicles simultaneously in your farming business (such as in fleet operations). You can’t use actual expenses for a leased vehicle if you previously used the standard mileage rate for that vehicle.

You can take the standard mileage rate for 2025 only if you:

Owned the vehicle and used the standard mileage rate for the first year you placed the vehicle in service, or
Leased the vehicle and are using the standard mileage rate for the entire lease period.

If you take the standard mileage rate:

Multiply the business standard mileage rate by 70 cents a mile; and

These expenses can be deducted only if they’re consistent with a conservation plan approved by the Natural Resources Conservation Service of the Department of Agriculture or a recovery plan approved pursuant to the Endangered Species Act of 1973 for the area in which your land is located. If no plan exists, the expenses must be consistent with a plan of a comparable state agency. You can’t deduct the expenses if they were paid or incurred for land used in farming in a foreign country.

Don’t deduct expenses you paid or incurred to drain or fill wetlands, or to prepare land for center pivot irrigation systems.

Your deduction can’t exceed 25% of your gross income from farming (excluding certain gains from selling assets such as farm machinery and land). If your conservation expenses are more than the limit, the excess can be carried forward and deducted in later tax years. However, the amount deductible for any 1 year can’t exceed the 25% gross income limit for that year.

For details, see chapter 5 of Pub. 225.

Line 13 Enter amounts paid for custom hire or machine work (the machine operator furnished the equipment).

Don’t include amounts paid for rental or lease of equipment you operated yourself. Instead, report those amounts on line 24a.

Line 14 You can deduct depreciation of buildings, improvements, cars and trucks, machinery, and other farm equipment of a permanent nature.

Don’t deduct depreciation of your home, furniture or other personal items, land, livestock you bought or raised for resale, or other property in your inventory.

You can also elect under section 179 to expense a portion of the cost of certain property you bought in 2025 for use in your farming business. The section 179 election is made on Form 4562.

Special depreciation allowance. You can elect to claim a 100% special depreciation allowance for certain specified plants bearing fruits and nuts planted or grafted after January 19, 2025. In addition, you can elect to claim a 40% special depreciation allowance for certain specified plants bearing fruits and nuts planted or grafted after 2024 and before January 20, 2025. See the Instructions for Form 4562 for more information.

Electing farming business. If you made an election not to have the business interest expense limitation apply, any property with a recovery period of 10 years or more held by you must be depreciated under the alternative depreciation system. For details, see Rev. Proc. 2019-08, available at IRS.gov/irb/ 2019-03_IRB#RP-2019-08 (or its successor). For information about depreciation and the section 179 deduction, see Pub. 946 and chapter 7 of Pub. 225. For details on the special depreciation allowance, see chapter 3 of Pub. 946. See the Instructions for Form 4562 for information on when you must complete and attach Form 4562.

Line 15 Deduct contributions to employee benefit programs that aren’t an incidental part of a pension or profit-sharing plan included on line 23. Examples are accident and health plans, group-term life insurance, and dependent care assistance programs. If you made contributions on your behalf as a self-employed person to a dependent care assistance program, complete Form 2441, Parts I and III, to figure your deductible contributions to that program.

Contributions you made on your behalf as a self-employed person to an accident and health plan or for group-term life insurance aren’t deductible on Schedule F (Form 1040). However, you may be able to deduct on Schedule 1 (Form 1040), line 17, the amount you paid for health insurance on behalf of yourself, your spouse, and your dependent(s) even if you don’t itemize your deductions. See the instructions for Schedule 1 (Form 1040), line 17, for details.

You must reduce your line 15 deduction by the amount of any credit for small employer health insurance premiums determined on Form 8941. See Form 8941 and its instructions to determine which expenses are eligible for the credit.

Line 16 If you use the cash method, you can’t deduct when paid the cost of feed your livestock will consume in a later year unless all of the following apply.

Line 18 Don’t include the cost of transportation incurred in purchasing livestock held for resale as freight paid. Instead, add these costs to the cost of the livestock.

Line 20 Deduct on this line premiums paid for farm business insurance. Deduct on line 15 amounts paid for employee accident and health insurance. Amounts credited to a reserve for self-insurance or premiums paid for a policy that pays for your lost earnings due to sickness or disability aren’t deductible. For details, see chapter 4 of Pub. 225.

Lines 21a and 21b

Interest allocation rules. The tax treatment of interest expense differs depending on its type. For example, home mortgage interest and investment interest are treated differently. Interest allocation rules require you to allocate (classify) your interest expense so it’s deducted (or capitalized) on the correct line of your return and receives the right tax treatment. These rules could affect how much interest you are allowed to deduct on Schedule F (Form 1040).

In most cases, you allocate interest expense by tracing how the proceeds of the loan are used. See chapter 4 of Pub. 225 for details.

If you paid interest on a debt secured by your main home and any of the proceeds from that debt were used in your farming business, see chapter 4 of Pub. 225 to figure the amount to include on lines 21a and 21b.

How to report. Before entering an amount on line 21a or 21b, see the Instructions for Form 8990 to identify whether you are required to limit your business interest expense or whether you can elect not to limit your business interest expense. If you are required to limit your business interest expense, include only the amount you are allowed to deduct on lines 21a and 21b. If you are not required to limit your business interest expense and if you have a mortgage on real property used in your farming business (other than your main home), enter on line 21a the interest you paid for 2025 to banks or other financial institutions for which you received a Form 1098 (or similar statement). If you didn’t receive a Form 1098, enter the interest on line 21b.

If you paid more mortgage interest than is shown on Form 1098 (or similar statement), see chapter 4 of Pub. 225 to find out if you can deduct the additional interest. If you can, include the amount on line 21a. Attach a statement to your return explaining the difference and enter “See attached” in the margin next to line 21a.

If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on the mortgage and the other person received the Form 1098 (or similar statement), include your share of the interest on line 21b. Attach a statement to your return showing the name and address of the person who received the Form 1098 (or similar statement). In the margin next to line 21b, enter “See attached.”

Don’t deduct interest you prepaid in 2025 for later years; include only the part that applies to 2025.

If you use your vehicle for both business and personal