What’s New

Standard mileage rate. The business standard mileage rate is 70 cents a mile for 2025.

Bonus depreciation. The 100% special depreciation allowance is restored for qualified property acquired after January 19, 2025. However, property put into service between January 1, 2025, and January 19, 2025, or acquired before January 20, 2025, and put into service later will remain subject to the phase-down rules under prior law. For more information, see Form 4562, Depreciation and Amortization, and its instructions.

Increased section 179 deduction dollar limits. For tax years beginning in 2025, the maximum section 179 expense deduction is $2,500,000. This amount is reduced by the amount by which the cost of section 179 property placed in service during the year exceeds $4,000,000.

Business interest expense limitation. The business interest expense in your farming activity may be limited. For tax years beginning in 2025, the calculation of adjusted taxable income includes a requirement to add back to taxable income the deductions for depreciation, amortization, and depletion to arrive at the amount that is used to determine if your interest expense is limited. For more information, see Form 8990, Limitation on Business Interest Expense Under Section 163(j), and its instructions.

No tax on car loan interest. If you are self-employed and use your vehicle for personal and business use, you may be eligible to take a deduction for the interest for the personal use on Schedule 1-A (Form 1040). You can only deduct the part of the interest expense that represents the business use of your vehicle in the farming activity on Schedule F (Form 1040). See the Instructions for Schedule 1-A (Form 1040) for more information.

Election to pay tax on farmland sale or exchange in install- ments. P.L. 119-21, commonly known as the One Big Beautiful Bill Act, created a new section 1062 that allows taxpayers to elect to pay the net income tax attributable to the gain on the sale or exchange of qualified farmland property to a qualified farmer through four equal annual installments beginning in the year of sale or exchange. This election is available for tax years beginning after July 4, 2025. For more information, see section 1062 and the new Form 1062 when it becomes available.

Expansion of tax relief in disaster situations. The eligibility and filing procedures for claiming a personal casualty loss as a result of a disaster have been expanded. For more information, see Pub. 225, Farmer’s Tax Guide, and Pub. 547, Casualties, Disasters, and Thefts.