All articles 6 min read

Special Estimated Tax Rules for Qualified Farmers: Farm Business Taxes (2025 IRS Guide)

This guide covers “Special Estimated Tax Rules for Qualified Farmers” within farm business taxes. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 225 (2025), Farmer's Tax Guide, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Special Estimated Tax Rules for Qualified Farmers

Special rules apply to the payment of estimated tax by individuals who are qualified farmers. If you are not a qualified farmer, as defined next, see Pub. 505 for the estimated tax rules that apply.

Qualified Farmer

An individual is a qualified farmer for 2025 if at least two-thirds of their gross income from all sources for 2024 or 2025 was from farming. See Gross Income next for information on how to figure your gross income from all sources, and see Gross Income From Farming, later, for information on how to figure your gross income from farming. See also Percentage From Farming, later, for information on how to determine the percentage of your gross income from farming.

Gross Income

Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from income tax. On a joint return, you must add your spouse’s gross income to your gross income. To decide whether two-thirds of your gross income was from farming, use as your gross income the total of the following income (not loss) amounts from your tax return.

Wages, salaries, tips, etc.
Taxable interest.
Ordinary dividends.
Taxable refunds, credits, or offsets of state and local income taxes.
Gross business income from Schedule C (Form 1040).
Capital gains from Schedule D (Form 1040). Losses are not netted against gains.
Gains on sales of business property from Form 4797.
Taxable IRA distributions, pensions, annuities, and social security benefits.
Gross rental income from Schedule E (Form 1040).
Gross royalty income from Schedule E (Form 1040).
Taxable net income from an estate or trust reported on Schedule E (Form 1040).
Income from a Real Estate Mortgage Investment Conduit reported on Schedule E (Form 1040).
Gross farm rental income from Form 4835.
Gross farm income from Schedule F (Form 1040).
Your distributive share of gross income from a partnership, or limited liability company treated as a partnership, from Schedule K-1 (Form 1065).
Your pro rata share of gross income from an S corporation, from Schedule K-1 (Form 1120-S).
Unemployment compensation.
Other income not included with any of the items listed above.

.The calculation of farm income for soil and water conservation expenses differs from the calculations for income averaging and estimated tax payments. See Income Averaging for Farmers and Estimated Tax, earlier..

Gross Income From Farming

Gross income from farming is income from cultivating the soil or raising agricultural commodities. It includes the following amounts.

Income from operating a stock, dairy, poultry, bee, fruit, or truck farm.
Income from a plantation, ranch, nursery, range, orchard, or oyster bed.
Crop shares for the use of your land.
Gains from sales of draft, breeding, dairy, or sporting livestock.

Gross income from farming is the total of the following amounts from your tax return.

Gross farm income from Schedule F (Form 1040).
Gross farm rental income from Form 4835.
Gross farm income from Schedule E (Form 1040), Parts II and III.
Gains from the sale of livestock used for draft, breeding, sport, or dairy purposes reported on Form 4797.

For more information about income from farming, see chapter 3.

.Farm income does not include:.

Wages you receive as a farm employee,
Income you receive from contract grain harvesting and hauling with workers and machines you furnish, and
Gains you receive from the sale of farmland.

Percentage From Farming

Figure your gross income from all sources, discussed earlier. Then, figure your gross income from farming, discussed earlier. Divide your gross farm income by your total gross income to determine the percentage of gross income from farming.

Example 1.

You had the following total gross income and gross farm income amounts in 2025.

Gross Income

	Total	Farm
Taxable interest	$3,000
Rental income (Sch E)	41,500
Gross Farm Income (Sch F)	75,000	$75,000
Livestock Gain (Form 4797)	5,000	5,000
Machinery Gain (Form 4797)	25,000	25,000
Total	$149,500	$105,000

Your gross farm income is 70% of your total gross income ($105,000 ÷ $149,500 = .70). Because your gross farm income is more than two-thirds of your total gross income, you are a qualified farmer and the special estimated tax rules apply.

Special Rules for Qualified Farmers

The following special estimated tax rules apply if you are a qualified farmer for 2025.

You do not have to pay estimated tax if you file your 2025 tax return and pay all the tax due by March 2, 2026. Failure to file your return and pay all tax due by March 2, 2026, may result in an underpayment of estimated tax penalty.
You do not have to pay estimated tax if your 2025 income tax withholding (including any amount applied to your 2025 estimated tax from your 2024 return) will be at least 66²/₃% (0.6667) of the total tax shown on your 2025 tax return or 100% of the total tax shown on your 2024 return.
If you must pay estimated tax, you are required to make only one estimated tax payment (your required annual payment) by January 15, 2026, using special rules to figure the amount of the payment. See Required Annual Payment next for details.

Figure 15-1 presents an overview of the special estimated tax rules that apply to qualified farmers.

Example 2.

Assume the same facts as in Example 1 except that your farm income from Schedule F was $90,000 instead of $75,000. This made your total gross income $164,500 ($3,000 + $41,500 + $90,000 + $5,000 + $25,000) and your gross farm income $120,000 ($90,000 + $5,000 + $25,000). You qualify to use the special estimated tax rules for qualified farmers, because 73.2% (at least two-thirds) of your gross income is from farming ($120,000 ÷ $164,500 = 0.7317).

.If your farm income falls below two-thirds for the previous year and current year, you may no longer meet the Qualified Farmer Designation..

Required Annual Payment

If you are a qualified farmer and must pay estimated tax for 2025, use the worksheet on Form 1040-ES to figure the amount of your required annual payment. Apply the following special rules for qualified farmers to the worksheet.

On line 12a, multiply line 11c by 66²/₃% (0.6667).
On line 12b, enter 100% of the tax shown on your 2024 tax return regardless of the amount of your adjusted gross income. For this purpose, the “tax shown on your 2024 tax return” is the amount on line 16 of your 2024 return modified by certain adjustments. For more information, see chapter 2 of Pub. 505.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

Publication 225 (2025), Farmer's Tax Guide: Estimated Tax — Special Estimated Tax Rules for Qualified Farmers — Internal Revenue Service; 2025 edition.

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.

Back to all articles