Schedule F (Form 1040) is the IRS form farmers and ranchers use to report farm income and expenses and work out their farming profit or loss. It's filed with Form 1040, 1040-SR, 1040-SS, 1040-NR, 1041 or 1065, and the profit flows on to Schedule SE for self-employment tax. Farmers also get a special estimated tax rule: no underpayment penalty if farm income is at least two-thirds of gross income and you file and pay by March 2, 2026.
If you're selling crops or livestock, or run a farm as a sole proprietor or single-member LLC, Schedule F is your version of Schedule C, with rules built around how farms earn. Everything below comes from the IRS 2025 instructions.
Who files Schedule F
- Individual farmers and ranchers reporting farm income and expenses.
- The sole member of a domestic LLC engaged in farming (unless it has elected to be taxed as a corporation using Form 8832).
- Married couples running an unincorporated farm who elect to be a qualified joint venture: each spouse files their own Schedule F and Schedule SE with their share.
- Estates, trusts and partnerships reporting farm activity, which enter their EIN rather than an SSN.
Some farm-related income doesn't go here. Rental income from pastureland based on a flat charge goes on Schedule E, and crop or livestock share rent where you didn't materially participate goes on Form 4835, which isn't subject to self-employment tax. If your business isn't farming, it belongs on Schedule C.
Filling in the top of the form
Line B asks for one of the 17 principal agricultural activity codes listed in Part IV on page 2 of the schedule; you pick the one that best describes where most of your income comes from. Line C is the accounting method box, line E is material participation, and lines F and G ask whether you made payments that need Forms 1099 and whether you filed them. If you don't know a code, don't guess: the list is short and it's on the form itself.
Cash or accrual
| Method | Report income | Deduct expenses | Complete |
|---|---|---|---|
| Cash | When received, or constructively received | When paid (prepaid expenses with a long benefit may be limited) | Parts I and II |
| Accrual | When earned | When incurred, even if unpaid | Part I line 9, Part II and Part III |
More farms can use the cash method than you'd think. A small business taxpayer for this purpose has average gross receipts of $31 million or less for the 3 prior tax years and isn't a tax shelter, as of October 2026 (the figure rose from $30 million for 2025).
What's new for 2025
| Change | Detail (as of October 2026) |
|---|---|
| Standard mileage rate | 70 cents a mile for 2025 |
| Bonus depreciation | 100% special allowance restored for qualified property acquired after January 19, 2025 |
| Section 179 limit | Maximum deduction of $2,500,000, reduced once qualifying property placed in service exceeds $4,000,000 |
| Car loan interest | The personal-use share may go on Schedule 1-A; only the farm business share goes on Schedule F |
| Farmland sales | A new election to pay tax on gain from selling qualified farmland to a qualified farmer in four equal annual installments, for tax years beginning after July 4, 2025 |
Bonus depreciation has a catch worth knowing: property placed in service between January 1 and January 19, 2025, or acquired before January 20, 2025 and placed in service later, stays under the old phase-down rules. So the purchase date on the paperwork matters, not just when the machine arrived in the yard. Depreciation and section 179 are claimed on Form 4562. Sales of farm property and of livestock held for draft, breeding, sport or dairy go on Form 4797, not Schedule F.
Crop insurance and disaster payments
Crop insurance proceeds are normally income in the year you receive them, and federal crop disaster payments are treated the same way. If 2025 was the year of the damage, you can elect to include certain proceeds in 2026 income instead by checking the box on line 6c and attaching a statement. The catch: if you defer any eligible proceeds from a business, you've got to defer all of them from that business. Line 6a still shows the total you've received in 2025.
Losses and the farming exception
Net operating losses generally can't be carried back any more, but farming losses are the exception, and that's a big one. A farm NOL must be carried back to each of the 2 tax years before the loss year unless you elect to forgo the carryback and carry it forward instead. For 2025, losses are figured on the new Form 172, which replaces Schedules A and B of Form 1045. Excess business loss limits on Form 461 still apply.
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Material participation
Line E asks whether you materially participated, which decides how the passive activity rules treat any loss you've made. The tests are in the Schedule C instructions. Retired or disabled farmers count as materially participating if they did so in 5 or more of the 8 years before retiring or becoming disabled, and a surviving spouse who actively manages the farm can qualify too, which matters for family farms that don't want to lose the status.
Other forms farmers often need
- Schedule J, to average farm income over the previous 3 years, which may reduce your tax.
- Schedule SE, for self-employment tax on farm profit.
- Form 1099-NEC or 1099-MISC if you paid at least $600 in rents or services in the year, and Form 8300 if you received more than $10,000 in cash in one or related transactions.
- Form 2290 if you use certain heavy highway vehicles in the business.
The verdict
Pick your accounting method deliberately, because it's what decides when crop sales and expenses land. Use the crop insurance deferral when a disaster year would otherwise stack two harvests' worth of income together, and check Schedule J income averaging every year. And if farming is at least two-thirds of your gross income, filing and paying by March 2, 2026 means you can skip quarterly estimates without a penalty.
Frequently asked questions
Who must file Schedule F?
Farmers and ranchers reporting farm income and expenses, including sole members of a farming LLC and spouses in a qualified joint venture.
What is the estimated tax rule for farmers?
No underpayment penalty if farm or fishing income is at least two-thirds of gross income for 2024 or 2025, and you file your 2025 return and pay the tax due by March 2, 2026.
Can I defer crop insurance proceeds to next year?
If 2025 was the year of damage, you can elect to include certain proceeds in 2026 income, but you must defer all eligible proceeds from that business.
Where do I report the sale of breeding livestock?
On Form 4797, not Schedule F.
