IRS Extends Tax Deadlines for Drought-Stricken Farmers in 49 States

• Author: Leo Olson
• Posted: 2025-09-30

Farmers and ranchers hit by drought across much of the U.S. are getting long-awaited help from the Internal Revenue Service (IRS).

This measure applies to 49 states and the District of Columbia, giving producers more time to rebuild herds without the immediate pressure of tax bills.

What Is the 2025 IRS Tax Relief?

Normally, when farmers sell livestock because of drought, they must replace them within two years to defer capital gains taxes. Under the new rule:

• The replacement period is extended to four years.

• Additional extensions are possible if drought conditions persist.

• The relief only applies to animals used for breeding, dairy, or draft purposes. Livestock sold for slaughter, sport, or poultry are not eligible.

Who Qualifies?

To benefit, farmers and ranchers must:

• Operate in a county listed in IRS Notice 2025-52 (covering nearly all states except Alaska).

• Prove that the sale of livestock was directly due to drought conditions.

• Keep records and documentation that connect the sale to drought impacts.

Benefits of the Relief

• Tax deferral: No immediate capital gains tax on drought-related livestock sales.

• Extended timeline: Four years to replace livestock instead of two, with possible further extensions.

• Financial breathing room: Allows farmers to stabilize operations and rebuild herds gradually.

• Wide coverage: Applies to most U.S. farming regions facing severe drought.

What Farmers and Ranchers Should Do Next

1. Check eligibility: Review IRS Notice 2025-52 for qualifying counties.

2. Maintain records: Keep documentation of sales tied to drought conditions.

3. Consult experts: Speak with a tax advisor who understands agricultural tax law.

4. Plan ahead: Use the extended timeline to strategically rebuild herds.