SPENCER — The message of the day at the tax law changes session of Ag Outlook 2026 was — plan ahead.

A panel of tax preparers and other legal professionals encouraged those in attendance to not only plan ahead to save money and tax dollars in their farming operations, but to do it so they can pass something down to their heirs.

“Plan for your death — do it for your loved ones,” said Ryan Crew, attorney with Montgomery, Barry, Bovee and Davis Law Firm in Spencer. “Tax time is a good time to work on your estate planning.”

Crew said estate taxes were terminated on the state level in 2025, but it still exists on the federal level. He said for 2025 and 2026, the annual gift exclusion is $19,000 per recipient per year, and a married couple can combine their exclusions to give up to $38,000 per recipient annually without filing a gift tax return.

The federal gift and estate tax exemption is $15 million per individual.

“With that higher dollar amount, estate taxes touch fewer people,” said Crew. “There are ways to avoid paying some estate taxes — the most common would be opening up a C Corp or S Corp, where you can gift stock to your beneficiaries at $18,000 per year, to keep it under the $19,000 annual gift tax exemption.”

Other points of interest included:

• Paying an estimate by Jan. 15 each year “buys time,” allowing a farmer to have until April 15 to file taxes.

“We’re pushing more farmers to pay estimates as we see more people waiting for information, such as K-1’s and 1099’s from investments,” said Mallorie Krikke, CPA with Williams & Company in Sheldon.

• Forgotten 1099s should be filed as soon as possible.

• The IRS can audit up to three years; if the IRS finds missing income they can audit up to six years, and failure to provide a tax return or providing fraudulent returns can allow audit times to open up indefinitely, Krikke said. She encouraged taxpayers to keep all receipts.

• C Corps don’t make as much sense for most farmers because of the possibility of double taxation upon farm land sales (being taxed at the entity and individual levels). Sole proprietorships, general partnerships, limited partnerships, LLC’s, C Corps and S Corps can be paired to create tax plans that work for farm families.

• For limiting Self Employment Tax (SEP), an S Corp helps “cap out” Social Security and Medicare taxes.

“Instead of paying Social Security or Medicare tax on 100 percent of whatever your net income is (and with a Schedule F as a sole proprietor), you only pay it based on the cash wage you pay yourself, and use the tax savings to hopefully pay down debt or save for retirement in other ways,” said Michael Schlitter, CPA with Erpelding & Voigt Company in Okoboji.

• Farmers should work with their accountants in retirement planning by the time they reach 50 years of age to talk about increasing income so they are ready for retirement when the time comes.

“Most farmers want to get their income to ‘0,’ but then when they get close to retirement and look at their Social Security, there’s nothing there,” said Ethan Van Holland, who owns his own accounting firm in Sheldon. “A lot of farmers think they’ll farm forever, but I have yet to see it happen.”

He said grain sale monies can be deferred until the following year, but no longer.

“At some point, the IRS is going to come knocking, and you’ll have to claim that income,” said Van Holland.

• Farmers can pre-pay inputs for the upcoming year, but cannot pre-pay further out. Krikke said there must be a business purpose for pre-paying, not just avoiding paying taxes.

• R&D credits are available for land owners, with deductions staying with the land owner. Owners must be looking at new farming practices, innovations, changes to methods, purchase new/innovative equipment, etc. in order to receive the credits.

• Tax exemptions for grain gifts mean the farmer must not sell the grain themselves, but haul it to the elevator and transfer ownership to a qualifying charity (501c-3). If they sell the grain, it’s subject to federal and state taxes, SEP taxes, etc. Recipients (qualifying charities) have to follow up on bills and prove that the grain was transferred to them. There are no tax benefits for cash gifts after grain has been sold by the farmer, and gifts of grain to loved ones can open up the recipient to have to pay taxes on money from that grain.

• Trump Accounts offer a good return if left in the (Traditional IRA) account until age 59-1/2. Yet, panelists agreed that the only true benefit is that a child gets a retirement account, but one of which that the child will eventually be taxed. They agreed there is no tax benefit to givers.

• “The One Big Beautiful Bill Act” gives farmers the ability to increase their base acres — it’s the first time in decades for that,” said Eric Hofland of Northwest Iowa Business Association in Spencer.

He said 2026 will return to farmers needing to decide which will pay a better return for them — the PLC (price loss coverage) or ARC (agriculture risk coverage).

Parting thoughts from the panelists included:

• Tax planning in October and November is beginning to become outdated as an “older generational thing.”

“There are a lot more options for farmers than purchasing assets to get depreciation deductions. Do your pre-tax appointment and see what options are available. There might be more than you think,” said Van Holland.

• “Things are always changing. If you only see your CPA or tax preparer once a year, you’re not utilizing them like you should be,” said Krikke.

• “We help farmers figure out their costs on a per-acre basis and compare it anonymously (with what others are paying). In times like this, you have to make sure you get every competitive advantage you can — $4/bushel corn is not that profitable, so you want to make sure you know where you are financially. And you never know when you will need to have an estate plan.”

• Do your tax planning no matter what size your operation is,” said Schlitter.