Purchases of farm equipment and machinery (including repair and replacement parts) for use by a qualified person and primarily used in producing and harvesting agricultural products, are subject to a partial exemption from tax.

The cost of livestock, like cows, horses, and pigs, can be deducted on your taxes. Food to feed livestock on the farm is considered tax-deductible. Write off seeds and plants you purchase to grow and harvest. Small supplies like shovels and hoes you use to farm are tax-deductible.

To apply for California tax exemption status, use form FTB 3500, Exemption Application. This is a long detailed form, much like the IRS form 1023.

California, like every other state, offers property tax breaks for agricultural land. Specifically, farmers are able to take 20 to 75 percent off their property tax bill if they agree not to develop their land for ten years and do so with at least 100 acres.

A form BOE-230, General Resale Certificate, can be issued by purchasers when purchasing goods they will resell in the regular course of their business operations. Generally, resale certificates are used: When purchasing finished items for resale.

Some items are exempt from sales and use tax, including: Sales of certain food products for human consumption (many groceries) Sales to the U.S. Government. Sales of prescription medicine and certain medical devices.

As you may know, most diesel fuel sales and purchases are taxable, but the state of California offers various tax exemptions for businesses engaged in agricultural activities, like farms, nurseries or food processing.