U.S. Sens. Pat Roberts (R-Kan.) and Amy Klobuchar (D-Minn.) introduced bipartisan legislation (S. 2202) 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. According to the bill’s sponsors, 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, chair of the Senate Ag 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.”

“Agriculture is cyclical in nature with producers making large investments in their crops, livestock, buildings, and equipment,” Klobuchar said. “We need to ensure our tax code is fair for farmers so that they can purchase the modern equipment that will allow them to produce more while spending less. This commonsense legislation will put money back in the pockets of our farmers and ranchers and enable them to grow our agricultural economy and strengthen our rural communities.”

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.

The bill, amending the Internal Revenue Code of 1986, was referred to the Senate Committee on Finance. It is supported by the American Farm Bureau Federation and the National Farmers Union.

 

House Agriculture Committee action

On Wednesday, Oct. 21, the House Agriculture Committee held its second hearing to examine foreign agricultural subsidies. Members and witnesses discussed the trade-distorting effects of subsidies utilized by our foreign competitors, emphasized the resulting injury to American producers, and reaffirmed the need for sound U.S. farm policy as a modest response.

 

Next week at the House Ag Committee

Tuesday, Oct. 27 – 10 a.m.

1300 Longworth House Office Building

Washington, D.C.

Subcommittee on Nutrition – Public Hearing

RE: Past, Present, and Future of SNAP: Breaking the Cycle

 

Wednesday, Oct. 28 – 10 a.m.

1300 Longworth House Office Building

Washington, D.C.

Full Committee – Public Hearing

RE: Big Data and Agriculture: Innovation and Implications