Harvest season is one of the busiest and most financially critical times of the year for Central Valley growers. Alongside managing crews, equipment, and unpredictable weather, there’s another pressing responsibility right around the corner: tax planning.
At DeMera DeMera Cameron, we’ve worked with Central Valley farmers for decades. One truth always stands out every tax season: timing. From equipment purchases to cash flow management, proactive planning during harvest season can mean the difference between costly surprises and valuable savings.
The Power of Equipment Depreciation
Agriculture runs on heavy, expensive equipment, and those investments can come with tax advantages.
- Section 179 Deduction
In 2025, farmers can deduct up to $1.16 million in qualified equipment purchases immediately, rather than depreciating them over several years. Tractors, combines, and irrigation systems all qualify. - Bonus Depreciation
On top of Section 179, bonus depreciation allows you to deduct a percentage of larger purchases upfront. For farmers expanding operations, this can provide meaningful cash flow relief. - Strategic Timing
Purchasing equipment before year-end helps offset high harvest income, reducing taxable liability in the current year. Planning is everything; wait too long, and you may lose the chance to capture these benefits.
Managing Harvest Cash Flow
Strong yields and successful harvests often lead to an influx of income. But without a plan, high revenues can create tax burdens:
- Income Deferral
Some farmers may be able to defer income into the following year, balancing out taxable income. - Prepaying Expenses
From feed to seed to fuel, prepaying qualifying expenses before year-end can help lower current-year liability. - Fuel Tax Credits
Agricultural use of off-road fuel may qualify for federal credits. This is a detail too many overlook and can be capitalized on with the help of tax professionals.
Harvest may be seasonal, but tax planning should be year-round.
Common Mistakes in Farm Accounting
Even the most experienced growers can slip into habits that lead to lost dollars:
- Relying on outdated bookkeeping systems that miss deductions.
- Failing to track taxable vs. nontaxable income on government grants.
- Forgetting to log small expenses, like mileage or supplies, that add up over time.
These oversights may not just cost money; they can also raise red flags during audits.
Why This Matters More in 2025
Agriculture is facing increased scrutiny as tax codes evolve. Federal and state programs continue to adjust depreciation limits, fuel exemptions, and reporting standards. For family farms and multi-acre operations alike, the stakes are higher than ever.
By working with an ag-savvy CPA firm, you can:
- Maximize deductions under Section 179 and bonus depreciation
- Build a tax strategy that accounts for seasonal fluctuations
- Stay compliant with California and federal reporting
Smart Moves for Farmers
To stay ahead of tax planning this year, plan major purchases before year-end to take full advantage of deductions. Set aside a portion of harvest proceeds for upcoming estimated tax payments and schedule a mid-season financial check-in to align your operations with tax rules.
Keeping Your Farm Financially Strong
Harvest is about more than bringing crops out of the fields; it’s also about ensuring your hard work translates into lasting financial stability.
At DeMera DeMera Cameron, we partner with Central Valley farmers to turn harvest-season planning into year-round success. From depreciation strategies to cash flow management, we help you maximize savings and minimize stress.
Let’s make this harvest season the one that strengthens both your farm and your finances. Schedule your ag-focused planning session with DDC today.
