Selling Firewood in the USA: Taxes and Rules by State

Schedule C or Schedule F

A sole proprietor reports business income or loss on Schedule C¹. Firewood isn’t farming for tax purposes: the IRS says you are not farming if you are engaged only in forestry or the growing of timber².

• Hobby or business? The IRS weighs 11 factors. Hobby income is still reported⁸, and hobby expenses generally can’t be deducted⁹.
• Your own timber. A section 631(a) election treats cutting your timber as a sale or exchange, and comes with Form T. You don’t need Form T for an occasional sale (one or two every three or four years)¹⁰. Ask your accountant whether it pays for you.
• Records. Keep them generally three years; six if you leave out income of more than 25% of the gross income on your return; employment tax records at least four years¹¹.

Self-employment tax and the QBI deduction

Self-employment tax is 15.3%: 12.4% for social security and 2.9% for Medicare. It applies once your net earnings from self-employment are $400 or more; for 2026 the social security part stops at $184,500 of combined wages and self-employment earnings. You deduct the employer-equivalent portion when you figure your adjusted gross income³.

The qualified business income (QBI) deduction has 2026 threshold amounts of $201,750 (single) and $403,500 (joint), where its phase-in limits start. From 2026 there is also a minimum deduction of $400 for anyone with at least $1,000 of qualified business income⁵.

What you can deduct

Business costs come off your income before tax: log loads, fuel, chains and oil, repairs, insurance, wages and your business share of the truck.

• Home office. The simplified method is $5 per square foot, up to 300 square feet. The space must be used regularly and exclusively as your principal place of business; a separate structure used only for the business can qualify¹².
• Health insurance. Self-employed people can deduct their premiums, but not for any month they could join an employer-subsidized plan, including a spouse’s¹³.
• Fuel for off-road equipment. Fuel used off public roads in business equipment (the IRS example names chain saws used for customers) can earn a federal fuel tax credit on Form 4136. It isn’t available to most taxpayers, so check that you qualify¹⁴.

Section 179, bonus depreciation and the de minimis rule

Which recovery class a chainsaw, splitter or processor falls in matters once you sell it or in later years; ask your accountant rather than guessing.

Vehicles: mileage or actual expenses

The 2026 business mileage rate is 72.5 cents a mile from January 1 to June 30, and 76 cents from July 1 to December 31¹⁶.

• To use the standard mileage rate for a car you own, choose it in the first year the car is used in your business.
• You can’t use it on a car you have depreciated with MACRS, claimed Section 179 on, or taken bonus depreciation on.
• Business parking and tolls are deductible either way¹⁷.

Inventory under the small business rules

Which simpler accounting rules a small business may use depends on the gross receipts test: for 2026, average annual gross receipts of $32,000,000 or less over the three prior years⁵. How that applies to wood you buy in the fall and sell in the spring is in IRS Publication 334; go through it with your accountant.

Hiring your kids and spouse

• A child under 18 working in a parent’s sole proprietorship pays no social security or Medicare tax; under 21, no FUTA⁷.
• A spouse who works for your business pays income tax and social security and Medicare tax on the wages, but not FUTA¹⁸.
• The 2026 standard deduction for a single filer is $16,100⁵.
• Pay what the work is worth, actually pay it, and record the hours.

1099s, cash and Form 8300

• Form 1099-K: payment apps and other third-party settlement organizations report only when payments exceed $20,000 and the number of transactions exceeds 200. Card payments have no threshold⁶.
• Form 1099-NEC / 1099-MISC: for payments made after December 31, 2025, you issue one to a contractor (a hired hauler or cutting crew) once you pay them $2,000⁶.
• Form 8300: more than $10,000 in cash in one transaction or related transactions must be reported within 15 days¹⁹.

Estimated taxes

If you expect to owe $1,000 or more when you file, you generally pay estimated tax through the year, in four payment periods. You avoid the underpayment penalty by paying at least 90% of this year’s tax or 100% of last year’s, whichever is smaller²⁰.

Retirement accounts that cut your tax

Retirement plans for the self-employed, such as a SEP-IRA, let you put part of the year’s profit away before tax. Publication 560 covers the plans and their limits²².

State by state

Pick where you sell to open its rules. Where a state page couldn’t be confirmed, the block says who to ask instead of guessing.

Legal measurement: NIST Handbook 130

Handbook 130’s model rule: a cord is 128 cubic feet of wood ranked and well stowed; fireplace and stove wood is sold only by the cord, fractions of a cord or the cubic metre; "face cord", "rack", "pile" and "truckload" are not to be used; packages under 1/8 cord show liters; and every non-packaged sale comes with a delivery ticket naming the vendor and buyer, the date, the quantity, the price and the kind of wood²⁴. Each state adopts its own version.

The face cord calculator turns any face cord into its legal size.

Firewood movement and quarantines

• The federal emerald ash borer quarantine ended on January 14, 2021⁴⁹. State rules still apply: see your state above.
• Asian longhorned beetle regulated areas include Worcester County, MA; Nassau and Suffolk counties, NY; Clermont County, OH; and Charleston and Dorchester counties, SC. Hardwood firewood can’t leave them without a compliance agreement or permit³⁵.

Questions