By The Epoch Times | Created at 2026-09-16 14:36:36 | Updated at 2026-09-16 15:26:00
1 hour ago
The IRS has issued guidance on extending tax relief for eligible ranchers and farmers affected by drought conditions.
Typically, livestock sold or exchanged due to drought must be replaced within four years, and the IRS may extend this period if drought conditions persist. Eligible farmers and ranchers whose drought-sale replacement period was set to expire at the end of this year will now have until the end of the 2027 tax year to do the replacement, the IRS said in a Sept. 15 statement. Any taxes on transactional gains can also be deferred.
The tax relief applies only to profit made from livestock held for dairy, farm work, or breeding purposes. Transactions involving other types of livestock, such as those raised for sporting or slaughter, do not qualify for the tax relief. Sales of poultry are also ineligible.
“Eligible farmers and ranchers must show that drought prompted the sales or exchanges, and that the area received a federal drought designation,” the IRS said.
The relevant area must have suffered “exceptional, extreme or severe” drought conditions in any week between Sept. 1, 2025, and Aug. 31 this year, according to the agency.
The IRS guidance lists several regions in the 49 states, the District of Columbia, the Republic of the Marshall Islands, the Federated States of Micronesia, the Commonwealth of Puerto Rico, and the Virgin Islands of the United States that qualify for federal assistance due to drought during the one-year period. The only state not included on the list is Alaska.
Some of the states with a high number of regions qualifying for assistance include Texas, Virginia, Tennessee, North Carolina, Mississippi, Kentucky, Illinois, and Georgia.
“Large swaths of the United States continue to experience drought conditions, distressing hard-working American farmers and ranchers,” IRS Chief Executive Officer Frank J. Bisignano said in the statement.
“By extending relief for those who sell or exchange livestock, the IRS is providing much needed support to those who feed our nation.”
According to data from the National Integrated Drought Information System, for the week of Sept. 2 to Sept. 8, more than 49 percent of the United States was experiencing drought, with 101.8 million people living under such conditions. Out of 50 states, 44 were classified as experiencing moderate drought or worse.
Drought and Livestock
The American Farm Bureau Federation had warned in an April 16 report that a weak snowpack was signaling tight water supplies in the nation’s western regions.
Across most of western areas, snowpack was “well below historical averages,” the bureau said, adding that farmers and ranchers were facing difficult decisions that could extend beyond the current year.
“For livestock producers, pressure builds quickly as forage conditions deteriorate, forcing greater reliance on more expensive purchased feed and, in some cases, additional water hauling. As costs rise, the economics can shift rapidly, making herd reduction the only viable option,” the report reads.
“Those decisions extend beyond the current year. A smaller breeding herd means fewer calves in future seasons, and rebuilding takes time, often requiring multiple years between retention and realized supply.”
The Trump administration has taken action to mitigate the impacts of drought on farmers. In recent months, the U.S. Department of Agriculture rolled out assistance for farmers and livestock producers in Wisconsin, Washington state, Oregon, and Virginia affected by wildfires and droughts, according to the Farm Service Agency.
