Takeaways

  • With high equipment inventories, dealers may be ready to offer discounts.
  • The IRS rule on immediate 100% depreciation on equipment is permanent.
  • Drones and precision technologies will be “hot” items for sales this year.

It’s no surprise that farm equipment prices will likely continue to rise to during the coming year. In fact, 89% of farm equipment dealers expect prices will rise by 1-6% this year.

That predication comes from the January 2026 issue of Farm Equipment, another Lessiter Media publication that circulates to U.S. and Canadian ag machinery dealers. At the end of 2025, the magazines staff produced an in-depth 60-page “Annual Dealer Business Outlook & Trends” report-based data gathered from several hundred North American farm equipment dealers.

With rising costs taking place for new machinery throughout 2025, dealers cited trade disputes, tariffs, high interest rates and low commodity prices that led to a challenging and discouraging 2025 sales year. Unfortunately, most dealers expect these same equipment buying challenges to continue this year.

Capture “Bonus” Depreciation on Equipment Buys

While there were beneficial federal tax changes to farm equipment depreciation schedules in 2025, it didn’t seem to make much difference when it came to farmers deciding whether to invest in new and used machinery. But since these federal tax depreciation changes are permanent, growers will be in a position to take advantage of them when replacing older equipment this year.

Federal tax changes that fell under the “One, Big, Beautiful Bill” (OBBBA) can significantly benefit farmers by making 100% bonus depreciation permanent ibn new and used equipment bought after January 19, 2025. 

The Internal Revenue Service also increased the Section 179 deduction to $2.5 million (with a $4 million threshold). This offers immediate and full write-offs for expensive farm machinery and capital improvements, along with a 20% Qualified Business Income Deduction (QBID) and higher estate tax exemptions. 

These changes reverse prior phase-outs, making it easier to expense large purchases such as tractors, planters, drills, sprayers and combines in the year bought, rather than depreciating them over many years. 

Key Tax Provisions Summarized

  • Bonus Depreciation: This is permanent at 100% for qualifying new and used equipment and improvements, offering  immediate full expensing.
  • Section 179 Deduction: Increased to $2.5 million (with a $4 million phase-out threshold) for immediate expensing of equipment, structures and other assets, starting with the 2025 tax year.
  • Qualified Business Income Deduction: The 20% deduction for pass-through businesses (like LLCs and S-Corps) is permanent.
  • Estate Tax: The exemption is significantly raised to $15 million per individual ($30 million per couple) plus inflation adjustments, protecting more family farms from the estate “death tax.”

Some 44% of dealers anticipate new equipment sales will be down at least 2% during 2026. While one-third of dealers are predicting used equipment sales will drop in 2026, the other two-thirds expect sales to end up being as good or better than last year.

But if you’re in the market for new or used equipment, a good buying sign is the fact that 46% of dealers say their new equipment inventory is too high while 40% believe the used equipment inventory is too high. These dealers could be in a “dealing mood” to reduce the extra financial cost of having excess equipment sitting on their lots, especially with the new tax savings now available to farmers.

Tariffs Are Killer

North of the border, a Canadian dealer says tariffs will likely continue to be a major buying concern by creating inflationary pressure not only on new equipment, but also on the cost of parts. As an example, his dealership tried to buy a piece of U.S.-manufactured equipment and found at the last minute that an extra $25,000 had been tacked on due to tariff surcharges.

88% of dealers see precision technology as a major growth area for 2026…

The number of dealers that expect their mainline manufacturers to raise prices nearly tripled in 2025 compared to previous years. Only 1.2% of dealers anticipate no increase in new equipment costs this year while 89% expect increases of up to 6%.

Some 100% of surveyed John Deere and Case IH dealers are expecting increased equipment costs ranging from 1-6% coming their way in 2026. This is followed by 86% of Kubota dealers, 79% of New Holland dealers and 78% of AGCO (Massey Ferguson & Fendt) dealers. Some 17% of AGCO dealers and 14% of Kubota dealers are anticipating a rise in new equipment costs of 10% or more this year.

Meeting No-Till, Strip-Till Needs

Looking at precision farming technologies, 88% of dealers rank this as a major growth area this year. This area is of special interest to no-tillers and strip-tillers as they’re among the leaders in investing in newer precision technologies.

100% immediate depreciation is available on equipment purchases…

When it comes to equipment used by no-tillers, 67% of dealers expect planter sales to remain the same or be better than in 2025 while 70% expect the same for air seeders and drills. Some 73% of dealers anticipate sales of self-propelled sprayers will remain the same or be better this year than in 2025. This is followed by 76% of dealers wo expect pull-type sprayer sales to remain the same or better than in 2025.

If you’re in the market for a new tractor to pull a planter, air seeder, drill or grain cart, 35% of dealers estimate sales of 100-plus  horsepower tractors will drop in 2026 compared to last year. So there may be buying opportunities with dealers dealing with a high tractor inventory.

No-Tillers & Strip-Tillers in Better Buying Position

Like most growers, no-tillers and strip-tillers are having to tough it out in these crazy times for U.S. agriculture. But banking an extra $50 or more per acre with these practices when compared to farmers still doing minimum tillage or conventional tillage, they are in a better position to invest in new equipment during 2026.

This projection is documenter in the recent 2026 “No-Till Operational Benchmark Study” conducted by No-Till Farmer. Here’s what no-tillers and strip-tillers had to say about purchases planned for 2026 to take advantage of the new 100% equipment depreciation rules:

  • 20% plan to buy a drone.
  • 19% plan to buy a planter.
  • 14% plan to buy a drill or a self-propelled sprayer
  • 12% plan to buy a fertilization application unit.
  • 10% plan to buy a draper header
  • 10% plan to buy a roller crimper for terminating cover crops.
  • 10% expect to buy a pull-type sprayer.
  • 9% expect to buy an air seeder.
  • 4% expect to buy a strip-till rig or a vertical tillage tool.
  • 3% plan to buy a pull-type fertilizer spreader that could also be used to seed cover crops.
  • 3% anticipate buying a stripper header.