Can You Get a Tax Break for Hiring Your Children? Guide for Family Farms

Hiring your children to help on the farm isn’t just a way to teach responsibility and build family bonds — it can also offer meaningful tax advantages. If you’re wondering whether there’s a tax break to pay your kids, here’s what you need to know to stay compliant and maximize your savings. 

Tax Benefits of Employing Your Children 

Hiring your child as a legitimate employee of your farm can unlock several tax benefits: 

• Lower Your Taxable Income
  Wages paid to your child are considered a child employment tax deduction and can be written off as a business expense on Schedule F.
• Your Child Can Earn Tax-Free Income
  In 2025, children can earn up to $15,000 — the standard deduction for single filers — without owing federal income tax. This means you can pay your child a fair wage while keeping their earnings tax-free, depending on the amount and your business structure.
• Avoid Payroll Taxes
  If your farm is a sole proprietorship or a partnership where both partners are parents of the child, wages paid to children under 18 are not subject to Social Security and Medicare taxes, and those under 21 are exempt from FUTA tax.
• Contribute to an IRA
  Because your child is earning income, you can help them start saving early by contributing to a traditional or Roth IRA. This earned income opens the door to long-term financial growth and potential tax deductions.

What to Know About Hiring Your Children for Your Family Business 

Before you start writing checks, make sure your hiring practices meet IRS and Department of Labor standards for hiring children in a family business. 

1. Their Work Must Be Legitimate 

Your child must perform actual work that benefits the business — not just chores around the house. Examples include feeding livestock, cleaning equipment, or helping with recordkeeping. 

2. Their Work Must Be Age-Appropriate 

Federal labor and state laws require that tasks be suitable for the child’s age and skill level. For example, children under 16 cannot operate heavy machinery or perform hazardous tasks.  

3. Pay Them a Fair, Reasonable Wage 

The IRS expects wages to reflect the work performed. Overpaying your child could trigger scrutiny. Use industry benchmarks to determine a fair rate for your child’s wages.  

4. Follow State and Federal Employment Laws 

Even when hiring your own child, you must comply with labor laws. This includes completing IRS Form W-4, issuing a W-2, and maintaining detailed records of hours worked and tasks performed. 

Ready to explore how hiring your children could benefit your farm’s bottom line?

Hiring your children can be a smart move for your farm and your family — but only if done correctly. From reducing your taxable income to teaching your kids financial responsibility, the benefits are real. Just be sure to follow the rules, document everything and consult a tax advisor to ensure compliance. Connect with a local Farm Bureau agent to learn more about tax-smart strategies for your family business.