How Depreciation Works for Mid Michigan Farmers Buying Equipment
For farmers in the Mid Michigan Thumb Region, purchasing equipment like tractors, plows, or irrigation systems is a major investment. At Raymond & King CPAs, we specialize in helping farmers leverage depreciation to reduce their tax burden. Here’s how depreciation works for farm equipment in 2025.
What Is Depreciation?
Depreciation allows farmers to spread the cost of equipment over its useful life, reducing taxable income each year. Instead of deducting the full purchase price upfront, you deduct a portion annually, reflecting the equipment’s wear and tear. This tax strategy is a game-changer for Mid Michigan farmers managing cash flow.
Section 179: Immediate Deductions
Under Section 179, you can deduct the full cost of qualifying equipment—up to a 2025 limit—in the year of purchase. For example, a $50,000 tractor could be fully deducted, lowering your taxable income significantly. This is ideal for small farms in the Thumb Region looking to invest in growth without a hefty tax bill.
Bonus Depreciation and MACRS
If Section 179 doesn’t cover your purchase, bonus depreciation may allow you to deduct a large percentage (often 60% or more in 2025) in the first year. For remaining costs, the Modified Accelerated Cost Recovery System (MACRS) spreads deductions over 5-7 years for most farm equipment, accelerating savings early on.
Why Work with Raymond & King CPAs?
Choosing the right depreciation method depends on your farm’s finances and Michigan’s tax rules. Our Mid Michigan Thumb Region team at Raymond & King CPAs ensures your equipment purchases are optimized for tax savings. Our backroom accounting services track costs and streamline records, keeping you compliant and stress-free.
Plan Smart for 2025
Start planning equipment purchases early to maximize deductions. Keep detailed records of purchase dates and costs, and consult with us to determine the best depreciation strategy. Contact Raymond & King CPAs today for expert tax planning tailored to Mid Michigan farmers.