The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, includes several key tax provisions specifically beneficial to the equine and farming industries.
Major Tax Changes for Horse and Farm Owners
Depreciation Benefits
The biggest change is permanent 100% bonus depreciation for qualifying property (equipment, fencing, barns, most horses) purchased after January 19, 2025. Previously, 2025 bonus depreciation was only 40%. Section 179 expensing limits also increased to $2.5M annually (up from $1M) on up to $4M of purchases.
Business Tax Improvements
The business interest deduction limitation calculation was restored to a more favorable method by adding back depreciation when determining allowable interest expense. The 20% qualified business income (QBI) deduction for pass-through entities became permanent.
Loss Limitations
The excess business loss limitation remains capped at $250K ($500K married) but is now permanent. Importantly, excess losses still carry forward as net operating losses that can offset up to 80% of future taxable income, rather than being restricted to only future business income as earlier drafts proposed.
Other Changes
Casualty loss deductions for the January 2025 California wildfires now qualify for more favorable treatment. Form 1099 reporting thresholds increased from $600 to $2,000 for payments after December 31, 2025.
Limitations
Hobby expenses became permanently non-deductible, and wagering loss deductions are now limited to 90% of losses (previously 100%).
To learn more about this topic or if you have questions about how these potential changes could impact you and your business, contact your Dean Dorton advisor.
