(June 25, 2025)
In recent years, Congress has increasingly used the budget reconciliation process to fund agricultural programs traditionally included in the Farm Bill. This trend, which began with the Inflation Reduction Act, has continued with the current Senate and House budget reconciliation proposals—collectively referred to as the “One Big Beautiful Bill” or OBBB. These bills include significant funding for agricultural conservation programs, including the Natural Resource Conservation Service’s Environmental Quality Incentives Program, a major source of federal support for irrigation modernization and water efficiency improvements.
If the version of the OBBB being considered by the U.S. Senate in late June 2025 becomes law, then the net effect will likely be positive for the irrigation industry. This would result in comparable overall funding levels through 2031, with unobligated IRA funding being eliminated in the near-term and baseline EQIP funding being increased significantly through the 2031-time horizon. Given challenges to NRCS staffing levels and a backlog in EQIP project implementation, somewhat lower funding levels in the near-term and higher levels in the long-term may match up well with business and administrative realities. Furthermore, by eliminating IRA funding and increasing the baseline, the more restrictive provisions attached to the IRA EQIP funding will no longer be applicable to new EQIP contracts, which may improve the chance that some irrigation practices will be funded.
Here's a deep dive of recent funding history along with the current Senate proposal related to the OBBB going forward. The House proposal is the same.
| Federal Fiscal Year |
Baseline Funding Authorizations (Current Law) |
IRA Funding Authorizations* |
Senate Baseline Funding Authorization (OBBB) |
| FY19 |
$1,750,000,000 |
|
|
| FY20 |
$1,750,000,000 |
|
|
| FY21 |
$1,800,000,000 |
|
|
| FY22 |
$1,850,000,000 |
|
|
| FY23 |
$2,025,000,000 |
$250,000,000 |
|
| FY24 |
$2,025,000,000 |
$1,750,000,000 |
|
| FY25 |
$2,025,000,000 |
$3,000,000,000 |
|
| FY26 |
$2,025,000,000 |
$3,450,000,000 |
$2,655,000,000 |
| FY27 |
$2,025,000,000 |
|
$2,855,000,000 |
| FY28 |
$2,025,000,000 |
|
$3,255,000,000 |
| FY29 |
$2,025,000,000 |
|
$3,255,000,000 |
| FY30 |
$2,025,000,000 |
|
$3,255,000,000 |
| FY31 |
$2,025,000,000 |
|
$3,255,000,000 |
*IRA funding available only for practices that “directly improve soil carbon, reduce nitrogen losses, or reduce, capture, avoid, or sequester carbon dioxide, methane, or nitrous oxide emissions, associated with agricultural production” (P.L. 117-169)
*$8.45 billion in IRA funding available for NRCS to obligate through FY31
*As of February 20, 2025, $1.8 billion of the IRA EQIP funding has been obligated
Based on just the IRA EQIP funding obligations through Feb. 20, 2025, the total EQIP funding FY26 through FY31 under current law and OBBB is as follows:
- Current law - $18.8 billion ($12.150 billion baseline + $6.65 billion unobligated IRA Funding)
- OBBB - $18.53 billion
However, because more IRA EQIP funding will be obligated before the OBBB passes, the final totals will likely result in the OBBB providing slightly higher overall funding from FY26 to FY31. Lastly, because the new funding in the OBBB is structured as the baseline (as opposed to temporary IRA funding), the higher baseline funding will likely pay dividends by establishing this new high-water mark for future farm bills or other reconciliation bills.
While the EQIP program funds a range of practices, in recent years it has funded between approximately $150 and $300 million in irrigation and irrigation-related practices, making it a very significant program to the ag irrigation industry. If one accounts for the cost share paid for by producers under the program, the irrigation expenditures driven by EQIP get even larger. By way of comparison and according to the Irrigation Association’s 2020 Economic Impact Study, the estimate of total direct spending for crop irrigation equipment and installation was $2.377 billion. This comparison provides a sense of relative scale of the EQIP-related irrigation expenditures compared to overall expenditures.
The IA continues to monitor these developments closely and is actively evaluating parallel strategies to advance irrigation modernization through legislative, regulatory and administrative channels. Additionally, the IA is actively developing policy and programmatic initiatives to help producers access this funding and ensure that irrigation continues to be a central focus of EQIP’s conservation impact.
(June 25, 2025)
As temperatures rise and drought intensifies across much of the country, the U.S. Senate is advancing its sweeping reconciliation package — the “One Big Beautiful Bill” or OBBB — which includes tax policies that directly affect irrigation and landscaping businesses. This legislation, still subject to review by the Senate parliamentarian, would embed provisions that support workforce training, equipment investment, and research and development for businesses across the sector.
Here’s how these changes would play out in the day‑to‑day operations of an irrigation contractor:
- 529 Expansion for Certifications — The OBBB allows 529 savings plans to cover industry‑recognized credentials, making it possible for a technician to use tax‑advantaged savings to obtain a certified irrigation technician or designer credential. This can help contractors build a more skilled workforce and stay competitive.
- R&D Expensing — By restoring full expensing for research and development, a manufacturer can immediately write off the cost of creating a new smart controller or soil moisture sensor. An irrigation contractor that develops in‑house scheduling tools or trials new water‑saving technologies can now recapture those investments more quickly.
- Full Equipment Deductibility — Making 100% bonus depreciation and expanded Section 179 expensing permanent allows a landscaping or irrigation company to upgrade equipment — from trucks and trenchers to smart controllers and monitoring sensors — and deduct those costs right away. This frees up cash for growth and improvement every year.
- Fair Interest Deductibility — The OBBB restores a more favorable EBITDA‑based cap for the deduction of business loan interest. An irrigation contractor financing a new piece of equipment or expanding their service area can maintain more cash flow for operations and growth.
- 199A Deduction Enhancement — The Senate bill would make the 20% Qualified Business Income deduction permanent and expand the phase‑in range for service businesses and other entities subject to the wage and investment limitation. This adjustment increases the threshold for single filers from $50,000 to $75,000 and for joint filers from $100,000 to $150,000, while introducing an inflation‑adjusted minimum deduction of $400 for taxpayers with at least $1,000 of QBI from one or more active trades or businesses.
The Irrigation Association will continue to track developments closely and keep the industry informed as the Senate prepares for a final vote and the House considers its next steps.
(June 11, 2025)
Tariffs and trade relationships continue to evolve, and here are some updates as of June 11, 2025, that may be of particular interest to the irrigation industry:
- Canada – The U.S. imposed a 25% tariff on all non-USMCA compliant goods; Canada retaliated with its own tariffs on select goods, which don’t appear to have a significant effect on finished irrigation equipment.
- Mexico – The U.S. imposed a 25% tariff on all non-USMCA compliant goods; Mexico has not retaliated with its own tariffs.
- China – The U.S. and China announced the framework for a deal on June 11 that would result in tariffs on Chinese imports of 55% and tariffs on U.S. imports into China of 10%; details have yet to be released.
- Universal baseline tariff – The universal baseline tariff of 10%, first announced on April 2, 2025, is still in place for imports from all countries unless covered by specific exemptions or higher reciprocal rates like those above.
There are a number of useful tariff trackers out there that are periodically updated, including this one by the law firm Reed Smith. Given the dynamic nature and complexity of trade and tariffs, one should always consult with trade and legal professionals for the latest information and determining how it applies to a given product and situation.
Despite the continued uncertainty, there are some factors that may help limit or mitigate the irrigation industry’s exposure to tariffs. For example, in May the Irrigation Association wrote about how the irrigation industry in the U.S. exports far more center pivots and other irrigation equipment (both agricultural and landscape) than it imports. Being a net exporter of finished irrigation equipment, retaliatory tariffs are of greater importance, and to date retaliatory tariffs have been limited from key trading partners such as Canada, Mexico and Australia.
Another example of how tariff exposure could be mitigated relates to the supply chain for the plastics used in irrigation products, such as the black plastic polyethylene. Significant domestic plastic production occurs in the Gulf Coast region as well as the Ohio Valley and the Midwest from a feedstock of domestically sourced natural gas. As a result, the plastics industry enjoys a trade surplus, but China and other countries are still important to the plastics industry as a whole as reflected in this statement from the PLASTICS Industry Association - Across-the-board Tariffs Harmful to Plastics Industry, Says Seaholm.
Tariff impacts on plastics may be mitigated because the plastics industry has the potential to both use a higher percentage of its existing production capacity and expand in the U.S. in the future given the existing base of plastics manufacturing activity. For details, see this analysis by the PLASTICS Industry Association’s chief economist, Perc Pineda, PhD.
These factors may be even more favorable to the irrigation industry. Looking at data from the U.S. Census Bureau’s USA Trade Online, here are the import/export numbers for select polyethylene products, which are used to make the black plastics commonly used for many irrigation products:
| Product (HTS Code) |
U.S. Imports - 2024 |
U.S. Exports - 2024 |
| Polyethylene resin (LLDPE) – 3901.10.5000 |
$766,242,388 |
$3,997,463,860 |
| Polyethylene resin (HDPE) – 3901.20.5000 |
$1,477,493,920 |
$5,223,098,281 |
Without data on the trade shares relative to domestic shipments and given the irrigation industry is only a relatively small consumer of polyethylene, this trade data remains an imperfect snapshot. Nonetheless, the fact that polyethylene resin exports significantly exceed imports reflects that robust plastics manufacturing capacity exists in the United States. It also suggests that domestic manufacturing is cost competitive globally. Domestic supplies of important plastics, like polyethylene, should help limit tariff impacts on these inputs to many irrigation products.
The bottom line is that both the tariffs in place today and the ongoing uncertainty are headwinds for the irrigation industry, but at the same time some factors like the strength of finished irrigation equipment exports and the availability of domestic plastics industry will likely offer some help in limiting or mitigating the impacts.
(May 14, 2025)
As global trade negotiations evolve under the Trump administration, the Irrigation Association is monitoring developments that could impact irrigation equipment exports. A key area of focus is the potential effect of retaliatory tariffs from top export markets, particularly those with close trade relationships under the United States-Mexico-Canada Agreement (USMCA), which is the trade agreement that replaced the North American Free Trade Agreement. Notably, irrigation equipment exports from the U.S. to China are very limited.
To better understand the current trade environment, we examined data from the U.S. Census Bureau’s USA Trade Online, which tracks exports by Harmonized Tariff Schedule (HTS) codes. The most relevant categories for ag and landscape irrigation products include:
- 8424.82.0010 – Self-Propelled Center Pivot Irrigation Equipment
- 8424.82.0020 – Other Irrigation Equipment for Agricultural or Horticultural Use (e.g., lateral move systems)
- 8424.82.0090 – Other Agricultural or Horticultural Spraying and Dispersion Equipment
Center pivt equipment exports – 2024 highlights
In 2024, U.S. exports of center pivot irrigation systems (HTS 8424.82.0010) totaled $86 million. Notably, nearly 70% of these exports went to just two countries (Canada and Mexico) with a much smaller portion going to Australia shown below. Exports to other countries were more limited in number and value:
- Canada: $29.6 million
- Mexico: $27.8 million
- Australia: $5.5 million
In contrast to U.S. exports, the U.S. imported only $6.2 million in center pivots last year, confirming the strength of domestic manufacturing in this segment.
Broader irrigation equipment exports (both ag and landscape) – 2024 highlights
Exports under HTS codes 8424.82.0020 and 8424.82.0090 — covering a wider range of irrigation components — reached $485 million in 2024. Leading destinations included:
- Mexico: $117.6 million
- Canada: $64.4 million
- Australia: $42.9 million
There are significant U.S. exports to some countries beyond these three leading destinations and may be covered in future analyses by the Irrigation Association.
In contrast to U.S. exports, the U.S. imported $119.6 million of other irrigation equipment in 2024 covered by these HTS codes, maintaining a net export advantage.
Tariffs in the USMCA region matters
Together, Mexico and Canada accounted for nearly half of all U.S. irrigation equipment exports last year — more than $239 million across all product types. This underscores the vital importance of the USMCA trading bloc to our industry.
A good source of up-to-date tariff information can be found here at the Trump 2.0 tariff tracker | Trade Compliance Resource Hub compiled by the law firm Reed Smith. Here is a summary of where things stand with Canada and Mexico of relevance to irrigation equipment exports.
The Trump administration imposed a 25% import tariff on goods from Canada and Mexico that initially took effect on March 4, 2025. These tariffs were later suspended on goods that are eligible for duty-free trade under the USMCA. In 2024 about 38% of Canadian exports entered the U.S. duty-free under USMCA (Source - WSJ). The rules for determining duty-free status are very complex and specific to where components of a specific product are sourced and assembled. Therefore, one can’t make categorical determinations as to whether irrigation equipment is duty free.
Canada responded by placing tariffs on billions of dollars of specific U.S. imports, including fruits and vegetables, appliances and liquor, as well as its own 25% tariff on goods that are not duty-free under the USMCA.
Mexico has not imposed retaliatory tariffs on U.S. exports.
Tariff considerations moving forward
As trade dynamics continue to shift, the IA will provide members with timely updates and data-driven insights to help navigate global risks and maintain access to vital export markets. The analysis of 2024 irrigation equipment exports clearly shows that Canada and Mexico serve as major buyers of U.S.-made irrigation systems, and the USMCA and good trade relations with these partners is critical to the irrigation industry.
(May 12, 2025)
Professionals in the residential landscape irrigation industry can leverage two key forward-looking indicators to anticipate market trends: single-family building permits and the Leading Indicator of Remodeling Activity (LIRA). These metrics offer valuable insights into upcoming demand for irrigation services and products.
Single-family building permits, reported monthly by the U.S. Census Bureau, reflect the early stage of development for new homes. An uptick in these permits suggests a forthcoming increase in residential construction, which typically leads to heightened demand for landscape development, including irrigation systems. The most recent release is from April 17, 2025, and one can find useful graphs and time series for this data here. The U.S. Census Bureau data is updated monthly, with the next release scheduled for May 16, 2025.
The Leading Indicator of Remodeling Activity (LIRA), published quarterly by Harvard’s Joint Center for Housing Studies, projects short-term trends in national home improvement and repair spending. This indicator helps identify future turning points in the remodeling market, which can signal increased opportunities for irrigation upgrades and retrofits in existing homes. The LIRA is released in the third week after each quarter's closing. The most recent report published April 17, 2025, is titled Continued Gains Projected for Remodeling Amid Economic Uncertainty. While not reported separately in every quarterly report, the data includes outside property improvements such as landscaping or sprinkler systems. See the Improving America’s Housing 2025 report for details on data collection.
By monitoring these indicators, irrigation professionals can better align their business strategies with anticipated market demands, ensuring they are prepared to meet the needs of both new construction and remodeling projects.
(May 9, 2025)
As Congress deliberates in 2025 over President Trump’s proposed “big, beautiful bill”—a sweeping tax reform package aimed at making the 2017 Tax Cuts and Jobs Act (TCJA) provisions permanent—one provision garnering significant attention is the potential extension of 100% bonus depreciation under Section 168(k). This provision allows businesses to immediately deduct the full cost of qualifying equipment in the year it is placed into service. For farmers and large-scale agricultural operations considering the purchase of center pivot systems, drip irrigation, pump equipment, smart controllers, and other ag machinery and equipment, this accelerated tax benefit can dramatically lower the effective cost of investment.
The current target for passing new tax legislation, which could include extending 100% bonus depreciation, is July 4, 2025.
If an extension for 100% bonus depreciation is passed in the summer of 2025, this has the potential to increase irrigation equipment orders in Q3 and Q4.
Current phase-down of bonus depreciation
Under the TCJA, 100% bonus depreciation was available for qualified property acquired and placed in service after Sept. 27, 2017, and before Jan. 1, 2023. However, this provision is currently phasing down:
- 2023: 80%
- 2024: 60%
- 2025: 40%
- 2026: 20%
- 2027 and beyond: 0%
This gradual reduction diminishes the immediate tax benefits for equipment purchases, potentially impacting investment decisions in the agricultural sector. See the Iowa State University Center for Agriculture Law and Taxation article Expiring Tax Provisions Big Issue for 2025.
How 100% bonus depreciation benefits farmers
For example, a farmer purchasing a $100,000 irrigation system in 2025 would, under the current 40% bonus depreciation rate, be able to deduct $40,000 immediately. Assuming a 24% tax bracket, this results in a tax savings of $9,600. However, if 100% bonus depreciation were reinstated, the immediate deduction would be the full $100,000, leading to a tax savings of $24,000 — an additional $14,400 in savings. This immediate tax relief improves cash flow, allowing for reinvestment into farm operations or debt reduction.
Legislative outlook and considerations
The proposed extension of 100% bonus depreciation is part of a broader tax reform effort currently under consideration in Congress. The “big, beautiful bill” aims to solidify the tax cuts introduced in 2017, with discussions ongoing about the scope and funding of these provisions. While the House aims to pass the legislation by Memorial Day, the Senate has set a target date of July 4. The reconciliation process being used allows for passage with a simple majority, bypassing the filibuster, but internal divisions within the Republican Party and debates over spending cuts and deficit impacts present challenges.
Consultation with tax professionals advised
Given the complexity of tax laws and the potential changes on the horizon, farmers and agricultural business owners are strongly encouraged to consult with their legal and tax advisors. Professional guidance can help navigate the nuances of depreciation provisions, ensure compliance with current regulations and optimize tax strategies tailored to individual circumstances.