The 2008 Farm Act became law on May 22, 2008, and includes many provisions that are very specific to farmers. For example, a new business tax credit allows manufacturers and retailers of certain chemicals and pesticides a credit for 30% of the costs of protecting those chemicals. This credit is effective for expenses incurred after May 22, 2008, and before January 1, 2013. The 2008 Farm Act also provides a one-year cut in the tax rate on a corporation’s qualified timber gain to 15% for years ending after May 22, 2008, and beginning on or before May 22, 2009.

Other items listed in the 2008 Farm Act explain that: 1) Conservation reserve payments made after 2007 and received by those who are on Social Security retirement or disability are not subject to self-employment tax; 2) There is a limit on farming losses that a taxpayer can use to reduce other non-farming business income. Beginning after 2009, for entities other than C Corporations, the annual farming loss is limited to the greater of $300,000 ($150,000 for married filing separate), or the taxpayer’s total net farm income for the five previous years; and 3) There is a new credit for the development of biofuels produced from agricultural waste, wood chips, and switch grass for fuel produced after 2008 and through 2012.

The 2008 Farm Act has several other farming and non-farm related provisions. Our tax software will be fully updated to handle these new laws.

(For more information visit irs.gov.)