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Income Planning Opportunities for Farmers
With depreciation benefits continuing to evolve, the timing of renovations and upgrades matters.
Small businesses face a wide range of tax variables in 2026, making structured planning essential.
Farmers: Build Flexibility Into Income and Expense Planning Manage Income Volatility Proactively Agricultural income is inherently uneven. Using deferral strategies, crop insurance proceeds timing, and income averaging can help reduce the tax impact of strong production years. Optimize Equipment and Infrastructure Purchases Instead of defaulting to full expensing, consider whether spreading depreciation aligns better with projected income. This can preserve deductions for higher-income years. Leverage Agricultural-Specific Credits Credits related to fuel, energy efficiency, and conservation programs can significantly reduce tax liability. Proper documentation is essential to ensure credits are not lost in filing.
Real estate investors can greatly benefit from strategic timing and optimized deductions in 2026. Here are some ways how: 1. Revisit Cost Segregation Studies Accelerated depreciation continues to offer substantial tax savings. If you acquire or renovate a property in 2026, consider a cost segregation study to break assets into shorter recovery periods and boost early‑year deductions. 2. Plan Ahead for Potential Depreciation Phaseouts If bonus depreciation continues to phase down, planning large capital improvements early in the year can help capture more favorable rates. 3. Utilize 1031 Exchanges Thoughtfully A like‑kind exchange remains a powerful tool to defer capital gains. Map out potential transactions early, especially if planning to consolidate or expand your portfolio. 4. Track Passive Activity Rules Real estate professionals should ensure activity logs are accurate and complete to support material participation and unlock additional loss deductions.
How to Reduce Excess Federal Tax Withholding on Your W-4 Here Are Four Different Options
For Homeowners 1. Apply for Property Tax Exemptions Homestead exemption: Reduces the taxable value of your primary residence. Senior, veteran, or disability exemptions: Available in many states. Agricultural or conservation exemptions: For land used for farming or environmental purposes. 2. Challenge Your Property Assessment Request a copy of your property tax assessment and review it for errors. File an appeal if you believe your property’s assessed value is too high. Gather comparable sales data (comps) from similar nearby properties to support your claim. 3. Seek Assessment Caps or Limitations Some states cap annual increases in assessed value (e.g., California’s Proposition 13 limits increases to 2% per year). You can support or advocate for similar measures locally if not already in place. 4. Consider Property Improvements Carefully Major renovations or additions can raise your assessed value. Before improving, check how local assessors treat upgrades — some may exempt energy-efficient or necessary repairs. 5. Take Advantage of Property Tax Deferral Programs Seniors or low-income homeowners in some areas can defer tax payments until the property is sold or transferred. 6. Check for Local Tax Relief or Credit Programs Some cities or counties offer rebates or credits for low-income households or for certain types of properties (e.g., historic preservation).
Moving to a flat tax structure—where all taxable income is taxed at the same rate—can offer several economic, administrative, and policy advantages. Here are the main benefits: 1. Simplification of the Tax Code Fewer brackets and rules make the system easier for taxpayers to understand and comply with. Reduces administrative costs for both the government and individuals. Makes tax filing simpler—especially for small businesses and independent workers. 2. Improved Economic Efficiency Reduces distortions in work and investment incentives—people keep a consistent share of additional earnings regardless of income level. Encourages productivity and entrepreneurship since higher earnings aren’t “penalized” by steeper marginal rates. 3. Fairness and Transparency Treat all taxpayers equally—everyone pays the same rate on income. Reduces opportunities for tax avoidance and special-interest loopholes that often arise in complex progressive systems. Easier to communicate and enforce because everyone faces the same rate. 4. Promotes Economic Growth A flat rate can attract businesses and workers from higher-tax states or countries. Empirical research suggests flat taxes can lead to higher investment and faster job creation, especially when paired with base-broadening reforms. 5. Predictability and Stability Simplified, consistent rates provide stable revenue and make long-term financial planning easier for households and companies. Reduces the fiscal volatility that comes from progressive brackets heavily dependent on high earners’ income swings. 6. Encourages Broader Tax Base When rates are lower and simpler, fewer people seek loopholes or exemptions, widening the base and maintaining revenue. Governments can collect similar revenue with lower rates by reducing avoidance and improving compliance. 7. Supports State-Level Competitiveness For U.S. states, moving to a flat tax can improve rankings in tax competitiveness indices. States like Iowa, Arizona, and Georgia saw measurable gains in attracting investment after transitioning.
Here are 8 US States that enacted laws to transition from a graduated individual income tax system to a flat tax for the individual income system. Arizona Iowa Mississippi Georgia Idaho Louisiana Kansas Ohio Additional states in consideration: Kansas & Ohio
What it does: The new law creates a federal income tax deduction for “qualified tips” earned in tipped occupations, effective for the 2025 tax year (so you’ll file in early 2026). The deduction allows eligible workers to deduct up to $25,000 in tip income from their federal taxable income annually. It applies whether you take the standard deduction or itemize, because it’s an “above-the-line” deduction. It’s processed as a reduction of income, not a full exclusion: you still report the tip income, but you subtract (deduct) up to the limit. What it doesn’t do (and other limitations): It doesn’t exempt the tip income from payroll taxes (Social Security and Medicare) — those still apply to tip income. It’s for federal income tax only; state and local taxes may still apply based on your state. It’s temporary — the deduction is scheduled to cover tax years 2025 through 2028. Not all tip income qualifies. It must meet certain criteria (see below). There are income-phaseouts: higher earners get reduced benefit or may not qualify at all. Key eligibility and rules you must know: Here are the important details if you earn tips: Qualifying tips: Tips must be voluntarily given by the customer, not mandatory service charges or auto-gratuities added by the employer. Tips received in cash, debit/credit card, or through a tip-sharing program count — as long as they are properly reported. The person must work in an occupation that “customarily and regularly receives tips” (the Treasury/IRS will publish a list of eligible occupations). Income limits / phase-outs: A single filer’s modified adjusted gross income (MAGI) must be $150,000 or less to get full deduction. For joint filers it’s $300,000 or less for full deduction. As income rises above those thresholds, the deduction phases out. For example, for singles it phases out entirely at ~$400,000 MAGI. If you’re self‐employed, you can deduct up to your net tip-based business income (so you can’t deduct more than you earned). Other things to track: You must report your tip income (on W-2, 1099, or Form 4137 if required). Undeclared tips won’t qualify. The law is retroactive to January 1, 2025 (so tips earned this year should qualify, if you meet other rules). If you’re married and filing separately, you cannot claim the deduction. Why this matters for self-employed / tipped workers: If you are self-employed and receive significant tip income (e.g., hair stylist, rideshare driver with many tips, server who also works independently, etc.), this deduction can reduce your federal taxable income and thus lower your income tax liability. Because it’s an “above the line” deduction, it can also help reduce your Modified Adjusted Gross Income, which may help you qualify for other tax benefits or avoid phase-outs for other credits. However, you still must pay FICA / self-employment tax on your earnings, and you still must comply with tip‐reporting rules. The benefit is limited by the occupation eligibility, amount of tips, and your total income — so you’ll want to carefully track tips and report them accurately. If you earn tips but already have low taxable income (so you owe little or no federal income tax), the deduction may not have much impact. Experts estimate only a small percentage of tax filings will benefit.