Short answer
If at least two-thirds of your gross income comes from farming, you are a qualified farmer for federal estimated tax. For 2025 you can skip estimated payments by filing and paying everything by March 2, 2026, or make one payment by January 15, 2026. California has its own rules for state estimated tax.
Most people with income that has no withholding pay federal estimated tax four times a year. Farmers get a simpler option, and it is one of the reasons farm families in the Los Banos area tend to see their CPA early in the year. This answer explains who qualifies, what the two choices are and where California differs. Dates below are for the 2025 tax year as given in IRS Publication 225, the Farmer’s Tax Guide; they move a little every year.
Am I a qualified farmer?
The IRS says an individual is a qualified farmer for 2025 if at least two-thirds of their gross income from all sources for 2024 or 2025 was from farming. On a joint return, a spouse’s gross income counts too.
Gross income here is not the same as profit. Publication 225 lists what goes into the total, including wages, taxable interest and dividends, gross business income from Schedule C, capital gains without netting losses, gross rents, and taxable pensions and social security. Gross farm income is figured separately. An example in the publication shows a farmer with gross farm income of $105,000 out of total gross income of $149,500, which is 70 percent and therefore more than two-thirds.
Tip: A household with a large off-farm salary may not qualify even if the farm is busy. Ask your CPA to run the two-thirds test with both years’ numbers.
What are my choices if I qualify?
| Option | What you do | When (2025 tax year) |
|---|---|---|
| File and pay early | File the full 2025 return and pay all tax due; no estimated payments at all | By March 2, 2026 |
| One payment | Make a single required annual payment, then file by the normal deadline | By January 15, 2026 |
| Withholding covers it | No estimated tax if withholding is at least 66 2/3% of this year’s tax or 100% of last year’s | Through the year |
For the single payment, the required amount is the smaller of 66 2/3 percent of the current year’s tax or 100 percent of the prior year’s tax, figured with special rules on the Form 1040-ES worksheet. Unlike other taxpayers, qualified farmers use 100 percent of the prior year’s tax regardless of income.
What if I miss both dates?
If you do not pay the required estimated tax by January 15, 2026, or file and pay by March 2, 2026, you may owe an underpayment penalty. Farmers figure it on Form 2210-F. The penalty is based on how much was underpaid and for how long, so a late payment is still better than none.
What if I do not qualify?
Then the general rules in IRS Publication 505 apply, usually four installments through the year. Many households whose farm income is a smaller share of the total fall into this group without realizing it.
How does California handle it?
California runs its own estimated tax system through the Franchise Tax Board. Its standard schedule is four payments of 30, 40, 0 and 30 percent, and it has a limit on using the prior year’s tax for higher-income filers that, according to the Board, does not apply to farmers or fishermen. The details are in When Are California Estimated Tax Payments Due?. Ask your CPA how the federal choice you make fits with your state payments.
Why this affects when you choose a CPA
The early-March option only works if your records are ready in January and your CPA has time for you in February, the busiest weeks of the year. That is the practical reason to set up the relationship in the autumn, as suggested in How Do I Choose a CPA in Los Banos?.
Does filing by March 2 mean filing early?
Yes, and that is the hard part. Packer settlements, cooperative statements and program payment forms often arrive in late January or February. If any piece is late, the return cannot be finished, and the farmer who planned to file early may end up owing a penalty. Many CPAs with farm clients therefore suggest the single January payment as a backup: pay a safe amount by mid-January, then file by the normal deadline. Ask yours which approach fits your records.
Do the rules change from year to year?
The two-thirds rule and the single-payment option have been part of the Farmer’s Tax Guide for many years, but the exact dates shift with weekends and holidays, and Congress changes other farm rules often. The 2025 edition of Publication 225, for example, describes a new election for paying tax on certain farmland sales to qualified farmers in installments. Ask your CPA each autumn what is new for the coming filing season.
Records that make the test easy
- total farm sales and other gross farm income for this year and last;
- every other income source for both years;
- last year’s total tax from your return;
- withholding from any wages.
With those four items, a CPA can tell you in minutes which path you are on. Keeping farm records in a form that answers questions like this one is covered in What Farm Records Should I Keep for My CPA?.