Year-End Tax Moves Worth a Second Look Before You File
November 20, 2026 | Finance | Ag Lending Group Team
By late November, most of the year's decisions are already made — the crop's in, the marketing plan is mostly executed, and what's left is figuring out how the numbers land on paper. That's still worth real attention, because a handful of moves made before December 31 can shift your tax bill meaningfully, and we'd rather you make them deliberately than default into whatever happens automatically.
Prepaid Input Expenses
Prepaying next year's seed, fertilizer, or chemical can shift deductions into the current tax year, which is useful in a high-income year. The IRS does cap how much of your total deductible expenses can come from prepaid inputs, so this isn't unlimited, and it needs to be a genuine business purchase, not just cash moved around near year-end. Run this by your CPA before writing checks — the details of what qualifies matter.
Section 179 and Bonus Depreciation on Equipment
If you're financing equipment before year-end anyway, timing the purchase and placing it in service before December 31 can allow you to deduct a significant portion of the cost immediately rather than depreciating it over several years. This is one of the more commonly used tools in farm tax planning, and it's also one of the most commonly overdone — deducting more than your operation can actually use against income in a given year isn't strategic, it's just leaving deductions on the table for a future year when you might need them more.
Income Averaging
Farm income averaging lets you spread a high-income year's tax burden back across the prior three years, which can meaningfully reduce your bracket in a year when commodity prices or a land sale created an unusually strong income spike. It's underused, partly because it requires pulling together prior years' returns, but for the right situation it's one of the more valuable tools specific to farm taxation.
Deferred Grain Contracts
If cash flow allows, deferring grain sale proceeds into January through a deferred payment contract can push income into the next tax year — useful if this year was unusually strong and next year looks more typical. This only works if your operating cash flow can absorb the delay, so it needs to be weighed against your working capital position, not decided on tax savings alone.
This Isn't a Substitute for Your CPA
We're not tax preparers, and none of this should be treated as final tax advice — every one of these strategies needs to run through your CPA against your actual numbers before you act on it. What we can do is help you think through how a given tax move interacts with your financing, since prepaying inputs or deferring income both affect your cash position, which is very much our lane.
If you're weighing a year-end equipment purchase or a prepay decision and want to see how it plays against your operating line, bring us the numbers alongside your CPA conversation.