IRS extends drought tax relief for farmers, ranchers across the U.S.

The IRS has issued guidance extending tax relief to farmers and ranchers in 49 states — including Wisconsin — who sold or exchanged livestock because of drought conditions.

Under the guidance, those affected may take more time to replace their livestock and defer tax on any gains from the forced sales or exchanges.

Notice 2026-54 lists the specified areas, by county or other jurisdiction, that qualify for federal assistance.

The list includes 49 states, the District of Columbia, Puerto Rico and other areas that reported exceptional, extreme or severe drought during the 12-month period ending on Aug. 31, 2026.

The tax relief generally applies to capital gains realized by eligible farmers and ranchers from sales or exchanges of livestock held for draft, dairy or breeding purposes.

Sales of other livestock — such as those raised for slaughter or held for sporting purposes — and sales of poultry don’t qualify. Read more.