Tina Barrett, Executive Director of Nebraska Farm Business, Inc., has spent more than 20 years helping Nebraska farm and ranch families with financial management and planning. We sat down with Tina to discuss the financial outlook and strategies for today's producers. Nebraska Soybean Board (NSB): Nebraska farm income nearly doubled from 2023 to 2024 but is still far below the highs of 2021. At the same time, debt is rising and working capital is slipping. How should soybean farmers interpret these numbers and potentially prepare for more volatility?
Tina Barrett (TB): It would have been nice to have a crystal ball back in 2020–2022 to see how quickly that profitability would fade, because many of the decisions made then are affecting today’s numbers. Less financed capital purchases and less “sloppy spending” would have left farms with stronger cash flow and more working capital now. Producers now need to tighten their belts across the operation and carefully evaluate each decision. The key is to ensure choices make financial sense today, rather than doing things simply because “It’s what I’ve always done.”
NSB: With short-term debt and interest costs increasing, what steps can farmers take to manage cash flow more effectively?
TB: Cash flow management is often driven more by tax decisions than true management decisions, and that can create problems. Selling grain to pay down debt may save interest, but it often increases the tax bill, making balance between the two critical. Farmers on a cash basis can’t reduce debt year after year without recognizing more taxable income than what you spend on family living, taxes and principal payments. While paying taxes isn’t popular advice, paying a reasonable amount—based on accrual profitability—gives farms the ability to reduce debt, lower interest costs and build working capital.
NSB: Many advisors suggest fall is the best time to plan ahead for taxes. What are the most important things soybean farmers should be discussing in those early meetings?
TB: For most farms, fall is a natural time to begin tax planning, but depending on your operation, starting earlier can be even more effective. Early meetings give you time to plan for sales, debt reduction and cash flow without being rushed into last-minute decisions. Tax plans should go beyond just “matching last year” and instead consider your broader goals—such as retirement, land purchases or inventory management. Because every farm’s situation is unique, the right strategies are highly individualized, which makes clear communication with your advisor essential.
NSB: Farm income averaging can be a useful tool in years with big income swings. How can this strategy benefit Nebraska soybean producers?
TB: Farm income averaging is a powerful tool because it lets producers carry current high income back to years with lower income, using unused lower tax brackets without amending returns. It doesn’t help bring past high income forward, and it doesn’t affect self-employment taxes, but it can significantly reduce the effective tax rate in the right circumstances. We use income averaging for clients every year, even if the benefit is small, because you never know when it will make a big difference.
NSB: Diversifying income streams or adding value to operations can reduce risk. How does diversification affect tax planning, and what do farmers need to watch out for?
TB: Diversification can be valuable, but it adds complexity to tax planning. Investments outside the farm may generate dividends or pass-through income, often reported late in the spring, which can make meeting the March 1 filing deadline difficult without amending later. Diversifying within the operation can also complicate planning, especially with multiple entities and things like passive activity rules that limit how losses are used. The key is to understand the tax implications before making business decisions—never making the decision solely for tax purposes.
NSB: If farmers end the year with extra cash, is it better to invest in repairs, pay down land notes or set funds aside for estate and transition planning? Or something else completely?
TB: Having extra cash in a farming operation is always a good problem to have, but how you use it matters. Building working capital, paying down principal or saving for the future all generate taxable income, but even after paying taxes you still have significant cash available to strengthen your business. By contrast, spending on unneeded repairs or capital purchases just to avoid taxes may hurt long-term profitability, since you’ll still face taxes later when assets are sold. The best choice depends on your goals, so make decisions based on business needs and long-term strategy—not just the immediate tax impact.
NSB: Are there Nebraska-specific tools or resources you recommend to help farmers prepare for tax season?
TB: The best preparation for tax season is keeping accurate, up-to-date records. It’s less about which software you use and more about how well it’s maintained, since different systems work better for different operations. What matters most is that records are reconciled to the bank, reviewed for accuracy and clearly separate farm and personal income and expenses. Having a good inventory count also helps us estimate accrual income so we can put taxable income in the right place.
NSB: What advice do you give families about balancing budgets when farm income is unpredictable?
TB: Family living expenses can be one of the hardest areas to budget and control. Setting up a regular monthly transfer from the farm account to a personal account helps create discipline, and separate savings accounts for vacations or major purchases keep spending intentional. The key is to keep personal spending within your means, because overspending can erode net worth just as quickly as low farm profitability. At the end of the day, personal spending discipline is essential to long-term farm success.
NSB: What else do you see as top priorities regarding financial health for farmers in the remainder of 2025 and looking forward into 2026?
TB: Input decisions for 2026 are already being made, and because they make up such a large share of total costs, they need to be evaluated carefully. The goal should be maximizing profit, not just yield—for example, a seed promising more bushels per acre isn’t worth it if the extra cost outweighs the potential return. Sometimes, using less expensive inputs or reducing application rates can result in lower yields but higher net income. Beyond cost control, the top priority for most operations will be building working capital and improving liquidity heading into 2026.
NSB: Anything else you would like to add?
TB: The common thread across all of these issues is that good planning has to be proactive, intentional and individualized. What works for one farm may not work for another, and the best strategies balance tax considerations with the long-term health of the business. Avoiding rash decisions, keeping personal spending in check and focusing on profitability rather than just tax savings will position farms to thrive. At the end of the day, financial discipline and flexibility are what carry operations through volatile times.
