The Tax Cuts and Jobs Act changes how farmers and ranchers depreciate their business property.
Here are changes to depreciation that affect farmers:
- New equipment and machinery is five-year property.
- Used equipment remains seven-year property.
- The 150-percent declining balance method is not required for property used in a farming business and placed in service after Dec. 31, 2017.
- New and certain used equipment purchased during the tax year qualifies for 100 percent first-year bonus depreciation.
- Businesses that elect out of the interest deduction limit must use the alternative depreciation system to depreciate any property with a recovery period of 10 years or more.