Four senators have introduced bipartisan legislation that would amend the U.S. tax code to permanently set a five-year depreciation schedule for agricultural equipment.
The current tax code sets a seven-year depreciation schedule for agricultural equipment, while the depreciation schedule for construction equipment — which is similar in use and life span to farming equipment — is five years.
Changing the depreciation schedule for agricultural equipment to five years, they said, would make the tax code more consistent and aid rural development by aligning depreciation and debt service, increasing farm income by over $850 million a year, and helping farmers and ranchers finance new equipment and replace worn-out machinery.
The bill was introduced by Sens, Amy Klobuchar, D-Minn., Debbie Stabenow, D-Mich., Jerry Moran, R-Kans., and Pat Roberts, R-Kans.
“Putting money back in the pockets of our farmers and ranchers enables them to grow our agricultural economy and strengthen our rural communities,” Klobuchar said. “By bringing tax fairness to our farms and ranches, our agricultural producers can purchase the modern equipment that will allow them to produce more while spending less.”
“This bipartisan effort will strengthen American manufacturing and American agriculture,” Chairwoman Stabenow said. “As chairwoman of the Senate Agriculture Committee, I’m committed to streamlining and simplifying our nation’s farm policies and finding ways to make existing programs work better. This legislation will encourage farmers and agricultural producers to continue investing in their businesses, creating jobs and strengthening the economy.”
“Common sense dictates that depreciation schedules should match the typical length of debt service for farm machinery,” Moran said. “By reforming the tax code, we will better align the code with the realities of agribusiness and support our nation’s farmers and ranchers, who are critical to the success of our economy.”
“Providing certainty in the tax code by making agriculture equipment eligible for a five-year depreciation schedule makes sense and will go a long way in helping America’s farmers and ranchers invest in their businesses and communities,” Roberts said.
A five-year depreciation schedule would boost domestic demand for equipment, the senators said. The United States is the world leader in the production of agricultural equipment, with the industry directly and indirectly employing 250,000 workers.
Modern equipment is fitted with the latest safety features to help prevent injury and loss of life, as well as technology that employs emission controls that help reduce air pollution and fertilizer runoff.
Stabenow and Roberts are the chair and ranking member, respectively, of the Senate Agriculture Committee, and Klobuchar also serves on the committee. Moran serves on the Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies.