Quarterly Taxes for Farmers

What are estimated or quarterly taxes?

Employees usually have tax taken out of each paycheck. Self-employed people, including many farmers, may need to send estimated tax payments during the year to cover income tax and self-employment tax on what they earn. The name quarterly refers to payments that are often spread through the year.

Whether you must make them depends on your income, other withholding and other factors. Farmers have some special rules, so confirm with the IRS or a preparer.

The idea is simple: tax is due as income is earned, and no one else is sending it in for you. The details are what make it complicated.

Do farmers have special rules?

The IRS has had provisions that treat farmers differently from other taxpayers on estimated payments, including different schedules in certain cases. The conditions and dates change and depend on how much of your income comes from farming.

Do not rely on a rule you heard from a neighbor. Their income mix may be different from yours. Check the current IRS guidance or ask a licensed professional.

If you also have a job with withholding, ask whether that withholding can be adjusted to cover some of your farm income tax. It may simplify things.

Why do farm incomes make this hard?

Farm income is lumpy. You might sell most of your crop or calves in a single month, or have a bad year after a good one. That makes it difficult to guess what you will owe.

Careful records and a regular review of income help. A rough year-to-date profit figure, updated monthly, is the best tool for estimating.

A good test of your estimate is to compare it to last year's results. If this year is very different, find out why before you pay.

• Update year-to-date income and expenses monthly.
• Note large sales or purchases you expect.
• Keep a running estimate of the tax you may owe.

How can you set money aside?

A common habit is to open a separate savings account for taxes and move a share of each sale into it right away. That way the money is there when a payment is due, and you are not tempted to use it for operating costs.

Your preparer can suggest a percentage to set aside based on your own situation. It will differ for every farm.

Some farms set aside money after every payday, others after every sale. Pick a habit that matches how your cash arrives and stick to it.

What if you underpay or miss a payment?

Underpaying may result in penalties or interest. Rules about safe harbors and exceptions exist, and they are complex. Contact the IRS or your preparer if you realize you are behind, since they can explain your options.

Do not ignore notices. Open mail from tax agencies promptly and respond by the date stated.

Keep proof of each payment you make, including the date and amount. You will need it when you file your return.

• Keep the date and amount of every payment you send.
• Open and answer tax agency mail promptly.
• Ask about safe harbor rules before you assume you owe a penalty.

How do state and local taxes fit in?

Many states also have income tax, with their own estimated payment rules and dates. Some local governments do too. Check your state revenue department's website for how it treats farmers.

Property taxes and other local obligations follow separate schedules. Mark all the due dates on one calendar so none surprises you.

If you move to a different state or farm in more than one, ask a professional how each state treats your income.

How do you get started?

Meet with a tax professional and bring last year's return and this year's expected income. Ask whether you need to make estimated payments, how much, when and how to send them.

Then build the payments into your cash flow plan like any other bill. Treated as routine, they become much less stressful.

Review your estimate partway through the year. A bad hail year or a big sale can change what you owe, and an adjusted payment is easier than a surprise.

• Bring last year's return and this year's income so far.
• Ask how, when and where to send payments.

Last reviewed: November 12, 2026. Written by the Rural Farm Life Editorial Team. See our editorial policy.