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The provision promotes farmlandpreservation, supports succession planning and encourages sellers to transferland to active farmers instead of developers. Equine professionals may find morechances to buy land under favorableterms. Sellers should maintain clear documentation and properly record agricultural covenants, as IRS guidance mayevolve.Overall, the installment option supports agricultural continuity and offers apractical tool for legacy planning in theequine industry.overtime anD tip income DeDuctions Tipping is common in the equine industry – grooms, barn managers and freelance farriers often receive extra pay foroutstanding work. H.R. 1 creates a newfederal tax deduction of up to $25,000 for“qualified tips” reported on W-2, 1099-K,1099-NEC or voluntarily disclosed onForm 4317. This applies to tax years starting in 2025 and ending in 2028.To qualify, the tips must be received inan occupation that “traditionally and customarily” received tips as of December 31,2024. The IRS issued a proposed rule onSeptember 22 that identifies occupationscustomarily and regularly receiving tips,with a public comment period that endedon October 22. With the support of AHC’sRegulatory Committee, we submittedcomments asking that the classificationcategory “TTOC 506: Pet Caretakers” instead be labeled “TTOC 506: Pet and Livestock Caretakers.” This potentially coversmany service roles in the equine industry,such as barn staff, grooms, show assistantsand hospitality workers at events. Not allroles qualify, and high earners may see thebenefit phase out.The Treasury Department and IRS havereleased draft tax forms for the upcomingfiling season that include new deductionsfor tipped income and overtime pay. Theyalso announced plans for transition relieffor both “no tax on tips” and “no tax onovertime” in 2025. However, uncertaintycaused by the government shutdown hasleft stakeholders waiting for more detailson what that relief will entail.Key considerations for equine industryprofessionals:Documentation is essential. Tips mustbe properly reported to qualify. Cash tipsshould be logged and disclosed, whileelectronic tips processed through platforms like Venmo or PayPal may be reported via 1099-K or 1099-NEC.Know your occupation status. Workersmust be in a role that customarily receivedtips before the cutoff date. For example, agroom at a show barn likely qualifies,while a jockey or veterinarian may not.Watch your income thresholds. The deduction begins to phase out for individuals earning more than $150,000 and forjoint filers earning more than $300,000.Those above these limits may not benefitfrom the new provision.Voluntary reporting matters. If tips arenot reported by an employer or paymentplatform, workers can still disclose themvoluntarily using IRS Form 4317 to potentially qualify for the deduction.For equine businesses, it’s important toeducate staff on proper tip reporting andensure payroll systems are equipped tohandle separate tip entries. For workers,keeping a daily log of tips received andunderstanding how they’re reported canmake a significant difference come taxtime.casualty losses, Disaster relieF Casualty and theft loss deductions havelong been a complex area of tax law, particularly for agricultural and equine businesses that face unique risks from naturaldisasters, theft and property damage. H.R.1 expands relief. Starting in 2026, lossesfrom state-declared disasters will also qualify for deductions, not just federally declared events. The same reductionthresholds ($100 or $500 per incident) apply,but more businesses can now claim deductions for damages from local disasters.Operations should keep detailedrecords of losses, disaster declarations andproperty values, as thorough documentation is required by the IRS. For tax professionals, these expanded rules open newplanning opportunities to help clients recover when disaster strikes.The Treasury Department and IRS havereleased draft tax forms for the upcomingfiling season that include new deductionsfor tipped income and overtime pay.56 Arizona Horse Connection February, 2026Horses available sired by Metallics MVP, Dont Stopp Believin, Hickory Holly Time.Cow Horse, Cutting, Ropingand Barrel ProspectsPlease Give Us A Call!DUSTY A RANCH • Amado, AZB.K. Thwaits, D.V.M. Shelby Thwaits (520) 940-3573SANTORI RANCH• BOARDING • IRRIGATED PASTURES• LESSONS • HORSE CAMPS• ARENA RENTALTrainers on SiteSpecializing in lessons for all ages and abilities.Beginner to the show ring! Seasonedschool horses and leases available.955 W. Road 2 North Chino Valley, AZ(928) 848-3659 Santori-Ranch.comcontinued on page 58