Farmers, Ranchers In 49 States To Get IRS Tax Relief Due To Drought

Authored by Naveen Athrappully via The Epoch Times,

American farmers and ranchers who have sold or exchanged livestock due to drought conditions are eligible for tax relief, the IRS said in a Sept. 22 statement.

Generally, livestock sold due to drought must be replaced within four years. Under the latest extension, farmers and ranchers who had sold livestock due to drought, with replacement periods scheduled to expire by the end of 2025, will now have until the end of the 2026 tax year to make replacements.

Tax gains made from such sales or exchanges can be deferred, the agency said.

The relief applies to “capital gains realized by eligible farmers and ranchers from sales or exchanges of livestock held for draft, dairy, or breeding purposes. Sales of other livestock—such as those raised for slaughter or held for sporting purposes—and sales of poultry do not qualify,” the agency said.

The tax relief applies to “49 states, the District of Columbia, and other regions that reported exceptional, extreme, or severe drought during the 12-month period ending on Aug. 31, 2025,” it said.

To get the tax relief, applicants must prove that the sale or exchange of livestock was prompted by drought, with their areas covered under the federal drought designation, according to the IRS.

The tax relief comes at a time when the Western United States is experiencing “widespread drought conditions,” according to a Sept. 3 post by the National Integrated Drought Information System.

This year, 65.5 percent of the Western United States has been in drought, and 14 percent has reeled under “Extreme or Exceptional” drought, it said.

“Current drought coverage and intensity pales in comparison to peak drought conditions in the early 2020s—59.5 percent of the West was in Extreme or Exceptional Drought (D3-D4) in July 2021,” the post said.

“This record-setting Western U.S. drought in the early 2020s, plus the southwestern megadrought dating back to 2000, has left Western U.S. water supplies in a perilous position.”

For instance, 100 percent of the Colorado River Basin is in drought, reservoir levels in Utah are showing a “drastic decline,” and the state of Washington issued a drought declaration for the third straight year in June, it said.

“As most water in the West originates from runoff due to melting winter snow, the upcoming water year will be crucial for water supplies—and normal won’t suffice,” said the post.

“Many key headwaters need above-average precipitation, in some cases over multiple years, to bring water supplies back to sustainable levels.”

Drought and Livestock

Persistent drought conditions are afflicting livestock farmers. As of Sept. 5, 44 percent of U.S. cattle were impacted by such conditions, according to a Sept. 6 Facebook post by the National Cattlemen’s Beef Association.

In May, Secretary of Agriculture Brooke L. Rollins announced the release of relief payments to cover livestock losses suffered by producers impacted by adverse weather conditions in 2023 or 2024, the Department of Agriculture (USDA) said in a May 29 statement.

“The Department of Agriculture is stepping up to support livestock producers by expediting disaster payments when drought and wildfires strike. Under President Trump’s leadership, USDA has the backs of ranchers, and that’s why we are delivering much-needed emergency relief ahead of schedule,” Rollins said at the time.

Meanwhile, the USDA’s Farm Service Agency (FSA) also administers the Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program that provides financial aid to producers who suffer losses due to unfavorable weather conditions.

“Payments are based on a percentage of the fair market value of the livestock, honey bees, or fish lost, as well as the cost of feed and water shortages,” FSA said.