1040

Income Averaging for Individuals With Income from Farming or Fishing

Agency
IRS
Revision
2025
Fillable fields
27
Pages
2
Official source
IRS form page
Checked
October 21, 2026
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Page 1 of form 1040

Schedule J (Form 1040): Income Averaging for Farming or Fishing Income

Schedule J (Form 1040), Income Averaging for Individuals With Income From Farming or Fishing, is used to elect to figure income tax by averaging, over the previous 3 years (base years), all or part of the taxable income from a trade or business of farming or fishing.

The instructions say this election may give a lower tax if 2025 income from farming or fishing is high and taxable income for 1 or more of the 3 prior years was low. For the 2025 schedule, the base years are 2022, 2023 and 2024: the schedule adds one third of the elected farm income to each base year's taxable income and figures the tax at that year's rates.

The schedule says to attach it to Form 1040, 1040-SR, or 1040-NR, and only if it is used to figure the tax. This page hosts the 2025 schedule. You can fill it out free in your browser on this page and download it without an account.

Top of page 1 of Schedule J (Form 1040): Income Averaging for Farming or Fishing Income, as printed by IRS

What's on Schedule J (Form 1040)

Lines 1 to 4: the 2025 year

Taxable income from the 2025 return, elected farm income on line 2a with its capital gain parts on lines 2b and 2c, and the tax on the rest at 2025 rates.

Lines 5 to 8: base year 2022

2022 taxable income or the amount from an earlier Schedule J, plus one third of line 2a, and the tax on that total at 2022 rates.

Lines 9 to 12: base year 2023

2023 taxable income or the amount from an earlier Schedule J, plus the line 6 amount, and the tax on that total at 2023 rates.

Lines 13 to 16: base year 2024

2024 taxable income or the amount from the 2024 Schedule J, plus the line 6 amount, and the tax on that total at 2024 rates.

Lines 17 to 22: comparing tax

Line 17 adds the four taxes. Lines 19 to 21 hold the tax from the 2022, 2023 and 2024 returns or earlier Schedule J lines, and line 22 adds them.

Line 23: tax

Line 18 minus line 22. The schedule says to also include this amount on Form 1040, 1040-SR, or 1040-NR, line 16.

How to fill out Schedule J (Form 1040)

  1. 1

    Line 1

    Enter the taxable income from the 2025 Form 1040, 1040-SR, or 1040-NR, line 15.

  2. 2

    Line 2a

    Enter the elected farm income, no more than line 1. The instructions say it can include all income, gains, losses and deductions of the farming or fishing business, but not gain or loss from selling land, and that it need not be the entire amount.

  3. 3

    Lines 2b and 2c

    Complete them only if line 2a includes net capital gain. Line 2b is the part treated as net capital gain, and line 2c is the smaller of line 2b or the unrecaptured section 1250 gain from the business.

  4. 4

    Line 4

    Figure the tax on line 3 using the 2025 Tax Table, Tax Computation Worksheet or Qualified Dividends and Capital Gain Tax Worksheet, the Foreign Earned Income Tax Worksheet, or the Schedule D Tax Worksheet, as the instructions list.

    Line 4 on page 2 of Schedule J (Form 1040): Income Averaging for Farming or Fishing Income, as printed by IRS
  5. 5

    Lines 5, 9 and 13

    Enter the base year taxable income, or the line from an earlier Schedule J that the form names. If an amount is zero or less, the instructions give a taxable income worksheet for that year.

  6. 6

    Lines 19 to 23

    Enter the tax from each base year return, including only tax imposed by section 1 of the Internal Revenue Code, and use the corrected amount if the return was amended or changed by the IRS. Subtract line 22 from line 18 for line 23.

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Where it goes, records and limits

Where it goes

The schedule says to attach it to Form 1040, 1040-SR, or 1040-NR, and to attach it only if it is used to figure the tax.

Compare first

The caution on line 23 says the tax may be less if it is figured using the 2025 Tax Table, Tax Computation Worksheet, Qualified Dividends and Capital Gain Tax Worksheet, or Schedule D Tax Worksheet.

Prior year returns

The instructions say copies of 2022, 2023 and 2024 returns may be needed. Form 4506 requests a copy for a fee, waived in a federally declared disaster area, and Form 4506-T requests a free transcript.

Records to keep

The instructions say to keep a copy of the 2025 return for income averaging in 2026, 2027 or 2028, and, if no 2022 return was filed, to keep 2022 records for at least 3 years after April 15, 2026 (or the date the 2025 return is filed, if later).

Alternative minimum tax

The instructions say the election does not apply when figuring the alternative minimum tax on Form 6251.

Related forms

Who uses Schedule J (Form 1040)?

  • Farmers

    The instructions define a farming business as cultivating land or raising or harvesting any agricultural or horticultural commodity, including nurseries, sod farms, fruit and nut trees and raising animals.

  • Fishing businesses

    A fishing business is one in which the fish harvested are intended to enter commerce through sale, barter or trade, including catching fish and operations at sea in support of it.

  • Crew members paid a share of the catch

    The instructions include compensation as a crew member on a vessel in a fishing business, but only if it is based on a share of the catch or of the proceeds from its sale.

  • Landowners with share leases

    Leasing land to a tenant farmer counts only if the lease payments are based on a share of the tenant's production and set in a written agreement before the tenant begins significant activities.

  • S corporation shareholders

    The instructions list wages received as a shareholder in an S corporation engaged in a farming or fishing business among the income that can make up elected farm income.

  • Not a farming business

    The instructions say a farming business does not include contract harvesting of a commodity grown by someone else, or merely buying or reselling plants or animals grown or raised by someone else.

An individual filing Form 1040, 1040-SR, or 1040-NR who elects to average income from a farming or fishing business. The instructions say this does not require having been in the business of farming or fishing during any of the base years.

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Questions about Form 1040

What does Schedule J (Form 1040) do?

It is used to elect to figure income tax by averaging, over the previous 3 years (base years), all or part of the taxable income from a trade or business of farming or fishing.

Did I need to farm or fish in the base years?

No. The instructions say it is not required to have been in the business of farming or fishing during any of the base years.

Does all of my farm income go on line 2a?

Not necessarily. The instructions say not all taxable income from farming or fishing has to be included on line 2a, and elected farm income cannot exceed taxable income.

Does my filing status have to match the base years?

No. The instructions say farming or fishing income may be averaged even if the filing status was not the same in the election year and the base years.

Does Schedule J change the alternative minimum tax?

The instructions say the election does not apply when figuring the alternative minimum tax on Form 6251.

What if I did not file a 2022 return?

The instructions say to use the amount that would have been reported as taxable income had a return been required, and to keep the 2022 records for at least 3 years after April 15, 2026 (or the date the 2025 return is filed, if later).