Need a new tractor? U.S. Senator Pat Roberts (R-Kan.) has joined Sens. Amy Klobuchar (D-Minn.) and Jon Tester (D-Mont.) to introduce the bipartisan Agriculture Equipment and Machinery Depreciation Act to help farmers purchase new equipment and replace worn-out machinery by amending the U.S. tax code to permanently set a five-year depreciation schedule for certain agricultural equipment.
The current tax code sets a seven-year depreciation cost recovery period for agricultural equipment. Changing the depreciation schedule for agricultural equipment to five years would make the tax code more consistent and support rural development by aligning the length of time that farmers can take a depreciation deduction with the average useful life of that property.
“This commonsense legislation will give farmers and ranchers the certainty they need to invest in new, more modern equipment so they can create more jobs and growth in our communities,” said Roberts, Chairman of the Senate Agriculture Committee. “A five year depreciation schedule allows for predictability and fairness in our overly complex tax code, giving the agriculture community the ability to produce more efficiently and at a lower cost.”
“In Minnesota, our prosperity depends on supporting and strengthening farms and rural communities,” Klobuchar said. “Making the tax code more consistent with how farmers finance new equipment will allow them to write-off equipment costs sooner and put money back in their pockets. In turn, they will be better able to create jobs and boost our economy.”
“This bipartisan bill puts money back in the pockets of family farmers and ranchers,” Tester said. “With commodity prices down across the board, it is critical that our tax code is up to date and reflects the needs of hardworking farmers and ranchers.”
Under the tax code, taxpayers are allowed a depreciation deduction to allow them to recover the costs of investing in certain property, like farm machinery and farm-use motor vehicles. The recovery period for the deduction should match the useful life and financing of that property. According to surveys from the USDA’s Farm Service Agency, on average farmers and ranchers finance farm equipment and machinery for five years.