Planning Around Weather and Markets
One year the rain comes and the crop is heavy; the next, hail strips a field in ten minutes. Planning on the South Plains is about evening out those swings and making sure the farm, the practice or the rental portfolio passes on in good order. Without a Texas income or estate tax, the real decisions are federal, plus the franchise tax and property tax.
Statewide strategies appear on the Texas tax planning page; this one addresses weather, markets and farm succession.
Timing Crop Income
Cash-method farmers can choose when to sell crops, use deferred payment contracts, defer crop insurance and take CCC loans, all of which shift income between years. Prepaying some inputs for next year can also reduce taxable income, within limits. Income averaging smooths high years. The aim is steady income over time, not zero income in one year and very high income the next.
Equipment Purchases
Bonus depreciation and Section 179 allow most equipment costs to be deducted in the year of purchase, but deducting too much can leave little depreciation for later years and create large gains when equipment is traded. We plan purchases with the farm's expected income over several years.
Passing On the Farm
Many South Plains farms are family businesses passing to the next generation. Planning covers how land and equipment are owned, gifts of interests over time, special use valuation for farmland in estates and the stepped-up basis at death. The federal estate tax exemption is $15 million per person from 2026, so most farms will not owe estate tax, but income tax and family fairness still need attention.
Wind and Royalty Income
Landowners with wind leases or royalties have steady income that can be planned around. Gifts of mineral interests to children, charitable gifts of royalties and the choice between keeping or selling interests all have tax consequences. Selling a royalty interest usually produces capital gain.
Practice Owners
Physicians and other professionals in Lubbock can reduce tax through S corporation structures with reasonable salaries, retirement plans including cash balance plans, and planning around the QBI deduction limits for health services.
Texas Tech Families
Families paying for Texas Tech can use 529 plans, the Texas Tuition Promise Fund and education credits. Grandparents can contribute to 529 plans, and up to five years of annual exclusion gifts can be made at once.
Property Tax
Farmland can qualify for agricultural valuation, which taxes the land on its productive value rather than market value. Losing this status, for example by stopping farming, can trigger rollback taxes. Homeowners can use the homestead and over-65 exemptions.
Retiring From the Farm
Farmers stepping back often move from operating to renting their land. Cash rent is not subject to self-employment tax, but crop-share rent with material participation is. Selling equipment at a farm auction triggers depreciation recapture, which is ordinary income, so spreading sales over two tax years or trading into fewer machines may help. Conservation Reserve Program payments to retired farmers who are not farming are generally not subject to self-employment tax.
What a Plan Covers
- Crop income timing.
- Equipment purchases.
- Farm succession.
- Royalties and leases.
- Education and property tax.
Lubbock Tax Planning Questions
Can I defer crop income to next year?
Yes, through deferred payment contracts, crop insurance deferral and other methods.
Will my farm owe estate tax?
Most will not, given the $15 million exemption from 2026, but planning is still important.
What is agricultural valuation?
A property tax valuation based on productive value. Changing use can trigger rollback taxes.
Should I sell my royalty interest?
It depends on your goals. A sale usually produces capital gain.
Talk to BOMCAS About Tax Planning in Lubbock
Planning uses current books and filed business and personal returns. Plans are carried out through payroll and equipment purchases that affect sales and use tax. Clear past filings first and include foreign interests. From the Panhandle to the coast, our Texas pages on business and farm returns, personal returns, sales tax, bookkeeping, payroll, late filing and cross-border tax set out the statewide rules, gathered in the Texas overview.
Whether it is a section of irrigated cotton, a shop on 34th Street or a household near campus, a short description is enough for BOMCAS to suggest a starting point and list the records a quote would need. Reach us on the contact page or the form below, call 780-667-5250 or email info@bomcas.ca. Each Lubbock service is linked from the Lubbock overview. Nothing here is advice for a particular farm, business or family.