Agricultural Economics Department


Date of this Version




Nebraska sales and use tax for farmers and ranchers can be a difficult subject. When purchasing or leasing depreciable agricultural machinery and equipment for commercial agricultural use those purchases are listed as exempt from Nebraska and local sales and use taxes. The purchase of a 200- horsepower tractor or a new 12-row planter often is the first to come to mind when thinking of assets that fall into that category. The question that often arises though is what about other items such as a seed tender, auger wagon, or skid steer? For that answer you have to do research on both the law and the intended use.

The law in Nebraska defines the term of agricultural machinery and equipment as follows: Agricultural machinery and equipment is tangible personal property that is used directly in cultivating or harvesting a crop, raising or caring for animal life, or collecting or processing an agricultural product on the farm or ranch. Nebraska Department of Revenue Information Guide 6-368. Furthermore agricultural machinery and equipment must be depreciable, which requires a determinable life of longer than one year. The key, which is difficult in some cases, to this definition is the restriction that machinery and equipment must be used directly for the purposes stated above. The Nebraska Department of Revenue has provided a great example of this direct-use definition. If you were to purchase a grain storage bin from an Option 1 contractor, parts of that purchase would be taxable and parts of that purchase would be tax exempt. Items such as auger systems, bin sweeps, stirrators, and fans would all fall under the tax exemption. On the other side though, items such as the electrical control box, ladders, and the grain bin would be taxable.