– Dr. Andrew Griffith, Assistant Professor, Livestock Marketing Specialist, Department of Agricultural and Resource Economics, University of Tennessee
Could you mitigate some tax burden through capital purchases?
A question was asked recently concerning USDA’s farm income forecast for 2025. This question was more general as it related to farm income for all sectors of agriculture. However, this brought the thought of tax implications for cattle producers in 2025.
Many cattle operations will experience the strongest profits in operational history, which means many cattle producers will face income tax obligations they have never experienced. Now is the time to begin planning how these increased tax obligations will be handled.
Some producers will be able to mitigate the expected tax burden through capital purchases that should contribute to future profitability of the operation. Others, may benefit from shorter term purchase decisions. Some alternatives may include improving perimeter and cross fences, renovating a portion of pastures, upgrading working facilities, replacing equipment that has outlived its useful life, or any number of other purchase decisions.
The one thing to avoid is spending money just to spend money!