IRS Extends Drought Relief for Farmers and Ranchers
Update: 2025-09-24
Description
IRS Extends Drought Relief for Farmers and Ranchers
What Happened:
- IRS issued Notice 2025-52, extending tax relief for farmers and ranchers who sold livestock due to drought.
- Relief applies across 49 states, D.C., and other regions with drought (Sept. 2024 – Aug. 2025).
Who Qualifies:
- Eligible: Sales/exchanges of livestock held for draft, dairy, or breeding purposes.
- Not eligible: Livestock raised for slaughter, for sporting purposes, or poultry.
Relief Provided:
- Normally, replacement of drought-sold livestock must occur within 2 years.
- Extended to 4 years due to drought conditions.
- If drought persists, IRS can extend further.
- New rule: Farmers get until the end of the first tax year after the first drought-free year following the 4-year period.
- Example: If the deadline was end of 2025, now extended to the next tax year.
How Eligibility is Determined:
- Based on National Drought Mitigation Center designations of exceptional, extreme, or severe drought.
Further Resources:
- Notice 2006-82: Provides detailed examples of how the rule works.
- Publication 225 (Farmer’s Tax Guide): Guidance for reporting drought sales and other farm tax issues.
Big Picture:
This extension gives affected farmers and ranchers more time & flexibility to restore herds without immediate tax burden, easing recovery from widespread drought impacts.
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