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CAUTION

Farm income does not include:

Gross Income

Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from income tax. On a joint return, you must add your spouse’s gross income to your gross income. To decide whether two-thirds of your gross income was from farming, use as your gross income the total of the following income (not loss) amounts from your tax return.

• Wages, salaries, tips, etc.

• Taxable interest.

• Ordinary dividends.

• Taxable refunds, credits, or offsets of state and local income taxes.

• Gross business income from Schedule C (Form 1040).

• Capital gains from Schedule D (Form 1040). Losses are not netted against gains.

• Gains on sales of business property from Form 4797.

• Taxable IRA distributions, pensions, annuities, and social security benefits.

• Gross rental income from Schedule E (Form 1040).

• Gross royalty income from Schedule E (Form 1040).

• Taxable net income from an estate or trust reported on Schedule E (Form 1040).

• Income from a Real Estate Mortgage Investment Conduit reported on Schedule E (Form 1040).

• Gross farm rental income from Form 4835.

• Gross farm income from Schedule F (Form 1040).

Gross income from farming is the total of the following amounts from your tax return.

• Gross farm income from Schedule F (Form 1040).

• Gross farm rental income from Form 4835.

• Gross farm income from Schedule E (Form 1040), Parts II and III.

• Your distributive share of gross income from a partnership, or limited liability company treated as a partnership, from Schedule K-1 (Form 1065).

• Your pro rata share of gross income from an S corporation, from Schedule K-1 (Form 1120-S).

• Unemployment compensation.

• Other income not included with any of the items listed above.

• Wages you receive as a farm employee,

• Income you receive from contract grain harvesting and hauling with workers and machines you furnish, and

• Gains you receive from the sale of farm- land.

Percentage From Farming

Figure your gross income from all sources, discussed earlier. Then, figure your gross income from farming, discussed earlier. Divide your gross farm income by your total gross income to determine the percentage of gross income from farming.

Example 1. You had the following total gross income and gross farm income amounts in 2025.

Gross Income

Total Farm

Taxable interest . . . . . . . . . . $3,000 Rental income (Sch E) . . . . . . 41,500 Gross Farm Income (Sch F) . . . 75,000 $75,000 Livestock Gain (Form 4797) . . . 5,000 5,000 Machinery Gain (Form 25,000 25,000 4797) . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . $149,500 $105,000

Your gross farm income is 70% of your total gross income ($105,000 ÷ $149,500 = .70). Because your gross farm income is more than two-thirds of your total gross income, you are a qualified farmer and the special estimated tax rules apply.

Special Rules for Qualified Farmers

The following special estimated tax rules apply if you are a qualified farmer for 2025.

• You do not have to pay estimated tax if you file your 2025 tax return and pay all the tax due by March 2, 2026. Failure to file your return and pay all tax due by March 2, 2026, may result in an underpayment of estimated tax penalty.

• You do not have to pay estimated tax if your 2025 income tax withholding (including any amount applied to your 2025 estimated tax from your 2024 return) will be at least 66 ² /3% (0.6667) of the total tax shown on your 2025 tax return or 100% of the total tax shown on your 2024 return.

• If you must pay estimated tax, you are required to make only one estimated tax payment (your required annual payment) by January 15, 2026, using special rules to figure the amount of the payment. See Re- quired Annual Payment next for details.

The calculation of farm income for soil

TIP and water conservation expenses dif-

fers from the calculations for income averaging and estimated tax payments. See In- come Averaging for Farmers and Estimated Tax , earlier.

Gross Income From Farming

Gross income from farming is income from cultivating the soil or raising agricultural commodities. It includes the following amounts.

• Income from operating a stock, dairy, poultry, bee, fruit, or truck farm.

• Income from a plantation, ranch, nursery, range, orchard, or oyster bed.

• Crop shares for the use of your land.

• Gains from sales of draft, breeding, dairy, or sporting livestock.

92 Chapter 15 Estimated Tax Publication 225 (2025)

Figure 15-1 presents an overview of the special estimated tax rules that apply to qualified farmers.

Example 2. Assume the same facts as in Example 1 except that your farm income from Schedule F was $90,000 instead of $75,000. This made your total gross income $164,500 ($3,000 + $41,500 + $90,000 + $5,000 + $25,000) and your gross farm income $120,000 ($90,000 + $5,000 + $25,000). You qualify to use the special estimated tax rules for qualified farmers, because 73.2% (at least two-thirds) of your gross income is from farming ($120,000 ÷ $164,500 = 0.7317).

If your farm income falls below