Alex Howe

2025 Top LIFO Election Locks

Updated 02/09/2026 with December 2025 Producer Price Indexes (October – December PPI releases were delayed due to government shutdown)

In 2025, tariffs have created elevated inflation in most industries when compared to the historical averages. As a result, most companies can obtain material tax benefits from electing LIFO this year. The current average effective tariff rate on U.S. imported goods is 18%, which is nearly 7x higher than the 2024 average effective tariff rate of 2.5%.

The most notable LIFO election opportunities from a tax benefits perspective are summarized below by Bureau of Labor Statistics Producer Price Index (BLS PPI) group. The 2025 annualized inflation rates are listed below.

  • Processed foods & beverages: 2% inflation – 1x historical average
    • Meats: 9% inflation – 2.6x historical average
    • Seafood: 8% inflation – 2.1x historical average
    • Beverages & beverage materials: 5% inflation – 1.7x historical average
      • Soft drinks: 3.9% inflation – 1.2x historical average
      • Coffee: 25% inflation – 5.x historical average
  • Textile products & apparel: 4% inflation – 1.8x historical average
    • Apparel: 1.7% inflation – 1.3x historical average
    • Textile house furnishings: 6% inflation – 2.5x historical average
    • Industrial & other fabricated textile products: 11% inflation – 3.5x historical average
  • Metals & metal products: 14% inflation – 3.6x historical average
    • Steel mill products: 15% inflation – 4.6x historical average
    • Nonferrous metals: 29% inflation – 6.3x historical average
      • Precious metals (gold, silver, platinum etc.): 62% inflation – 13.7x historical average
      • Mill shapes (incl. aluminum & copper): 22% inflation – 6.4x historical average
      • Nonferrous wire & cable (incl. copper wire): 16% inflation – 3.8x historical average
    • Metal containers: 9% inflation – 3x historical average
    • Hardware: 7% inflation – 2x historical average
    • Plumbing fixtures & fittings: 8% inflation – 2.6x historical average
    • Heating equipment: 7% inflation – 1.6x historical average
    • Fabricated structural metal products: 8% inflation – 2.3x historical average
      • Metal doors, sash & trim: 15% inflation – 2.8x historical average
      • Metal tanks: 11% inflation – 2.3x historical average
      • Sheet metal products: 7% inflation – 1.9x historical average
      • Structural, architectural & pre-engineered metal products: 8% inflation – 2.1x historical average
  • Machinery & equipment: 5% inflation – 2.4x historical average
    • Construction machinery & equipment: 6% inflation – 1.9x historical average
    • Metalworking machinery & equipment: 5% inflation – 2x historical average
    • General purpose machinery & equipment: 8% inflation – 2.1x historical average
      • Pumps, compressors & equipment: 9% inflation – 2.1x historical average
      • Fluid power equipment (incl. hydraulics): 16% inflation – 3.4x historical average
      • Material handling equipment: 7% inflation – 1.8x historical average
      • Air conditioning & refrigeration equipment: 5% inflation – 2x historical average
      • Metal valves: 7% inflation: 1.7x historical average
      • Metal pipe fittings, flanges & unions: 9% inflation – 2.1x historical average
    • Electrical machinery & equipment: 5% inflation – 3.6x historical average
      • Wiring devices: 7% inflation – 1.9x historical average
      • Transformers & power regulators: 6% inflation – 1.2x historical average
      • Switchgear, switchboard & industrial controls equipment: 10% inflation – 2.5x historical average
      • Communications equipment & electronic systems: 5% inflation – 2.8x historical average
    • Instruments: 6.5% inflation – 2.4x historical average
      • Automatic environmental controls: 5% inflation – 2.2x historical average
      • Process control instruments: 7% inflation – 2x historical average
      • Fluid meters & counting devices: 7% inflation – 1.9x historical average
      • Engineering & scientific instruments: 12% inflation – 3.6x historical average
      • Measuring & controlling devices: 5.3% inflation – 2.4x historical average
  • Furniture & household durables: 4.6% inflation – 1.9x historical average
    • Wood household furniture: 11% inflation – 3.6x historical average
    • Commercial furniture: 5% inflation – 1.6x historical average
    • Household appliances: 5% inflation – 2.6x historical average
    • Home electronic equipment: 5% inflation – 2.9x historical average
    • Other household durable goods: 5% inflation – 2.1x historical average
  • Transportation equipment: 2% inflation – 1.3x historical average
    • Motor vehicles & equipment: 2.3% inflation – 1.6x historical average
    • Motor vehicle parts: 2.8% inflation – 2.2x historical average
    • Aircraft parts & equipment: 2% inflation – 1x historical average

Quick LIFO Tax Benefit Formulas

  • Current year LIFO taxable income reduction (aka LIFO expense): Prior year end inventory balance * Current year inflation rate
  • Current year LIFO tax benefit: Current year LIFO tax benefit * combined federal & state marginal tax rate

LIFOPro’s 2025 Top LIFO Election Candidates List

LIFOPro’s Top LIFO Election Candidates list is published annually to enable LIFO election scoping to be seamlessly integrated into year end tax planning (LIFO election scoping is commonly known as LIFO election benefit analysis). To minimize the time and effort required by CPA firms and companies to complete the LIFO election scoping process, we utilize proprietary KPIs and government inflation data to provide objective assessments on the preferability of LIFO and the timing of the election, and to estimate current and future LIFO tax benefits. CPA firms and companies can quickly accomplish the following using LIFOPro’s 2025 Top LIFO Election Candidates List:

  • Pre-screening companies/industries that should perform 2025 LIFO election scoping (benefit analysis)
    • Determine if LIFO is preferable for companies/industries
    • Determine if companies/industries are 2025 top LIFO election candidates
  • High-level 2025 LIFO election scoping for companies or industries
    • Estimate 2025 tax benefit from electing LIFO
    • Forecast expected future tax benefits of using LIFO
    • Forecast the expected future probability of LIFO annually creating a tax benefit
  • Record preliminary 2025 year end LIFO adjusting journal entry prior to completing final year end LIFO calculation (if there’s a high likelihood that LIFO will be elected this year; can be done to ensure LIFO is integrated into year end financial statements, which IRS LIFO conformity rule requires)

Our list is built upon the Bureau of Labor Statistics Producer Price Index (BLS PPI) groupings. They are an accurate and credible source for quickly measuring LIFO’s preferability, election timing and estimated tax benefits because many companies use these same indexes to perform the required LIFO inflation calculations, and the use of BLS PPIs for LIFO purposes is widely accepted by the IRS. It is organized into the following four tables (shown below):

  • Table 1.1 – Major commodity group: BLS PPI major commodity groups are the least-granular or broadest BLS groupings, and there are a total of 15 major commodity groups
  • Table 1.2 – Dealerships: BLS PPI groupings relevant to automobile, RV/powersports, ag/farm & construction machinery & equipment dealerships
  • Table 2 – Subgroups: There are a total of 96 subgroups which break out goods into more granular groupings than the 15 major commodity groups
  • Table 3 – Product classes: There are a total of 301 product classes which break out goods into more granular groupings than the 15 major commodity groups and 96 subgroups

Our list includes the following content for each Bureau of Labor Statistics Producer Price Index (BLS PPI) group:

  • Pre-screening fields
    • LIFO is preferable: Measures preferability & if election scoping should occur
      • Yes: LIFO is preferable & election scoping should be performed at some point in time
      • No: LIFO is not preferable, should not be used & scoping shouldn’t be performed
    • 2025 Top LIFO Election Candidate: Measures election scoping timing (when it should occur)
      • Yes value indicates LIFO election scoping should be performed this year
      • No value indicates LIFO election scoping should be deferred to a future period
    • 2025 LIFO Election Priority: Ranking system based on the following:
      • High: Best opportunity; 2025 inflation rate is ≥ 5% and/or 2025 tax benefit multiplier is ≥ 2x
      • Medium: Good opportunity; 2025 inflation rate is ≥ 2% and/or 2025 tax benefit multiplier is ≥ 1x
      • Low: LIFO election should be deferred to a future period when inflation & tax benefits are higher
      • N/A: Not applicable because LIFO is not preferable & therefore should not be used
    • Election scoping fields
      • 2025 annualized inflation rate: Used to estimate 2025 LIFO expense/reserve
      • avg. annual inflation rate: Used to forecast future LIFO tax benefits & compare current/past inflation
      • 20 year inflation frequency rate: Used to forecast future LIFO tax benefits & future inflation probability
Download LIFOPro’s 2025 Top LIFO Election Candidates List & Tax Benefit Calculator Tool Excel File

LIFOPro’s 2025 Top LIFO Election Candidates List & Tax Benefit Calculator

1.1 2025 Top LIFO Candidates by BLS PPI Major Commodity Group
Table 1.2 Dealership 2025 Top LIFO Candidates
Table 2. 2025 Top LIFO Candidates by BLS PPI Subgroup

 

Table 3. 2025 Top LIFO Candidates by BLS PPI Product Class

Performing LIFO Election Scoping Using LIFOPro’s 2025 Top LIFO Election Candidates List

LIFOPro offers complimentary election benefit analysis that provides a comprehensive assessment of the risks and rewards of LIFO using your client’s or company’s actual inventory data. Prior to obtaining this analysis, many of our CPA firm partners will perform a high-level benefit analysis because it acts as a pre-screening tool to confirm that further LIFO election scoping should be performed, and it provides meaningful KPIs that can be shared with the client during preliminary discussions about LIFO. To do so for a single client, take the following steps:

  • Step 1: Locate the BLS group within LIFOPro’s 2025 Top LIFO Election Candidates List that most closely matches your company/client’s product mix or industry & proceed to Step 2
  • Step 2: Locate the LIFO is Preferable field entry for the selected PPI
    • If the LIFO is Preferable entry is “Yes” – Proceed to Step 3
    • If the LIFO is Preferable entry is “No” – LIFO is not preferable for your client or company & LIFOPro recommends not exploring a LIFO election
  • Step 3: Locate the Top 2025 Election Candidate field entry for the selected PPI
    • If the Top 2025 Election Candidate entry is “Yes” — Proceed to Step 4. LIFOPro recommends exploring a 2025 LIFO election and obtaining a complimentary benefit analysis from LIFOPro.
    • If the Top 2025 Election Candidate entry is “No” – Defer scoping out a LIFO election until a future period in time. This is because of one or both of the following reasons:
      • The inflation is below your historical average and/or is less than 2%, which would indicate the 2025 tax LIFO benefit would be less than it would during a normal period of inflation
      • There is deflation, which would create a tax liability from electing LIFO in 2025
  • Step 4: Estimate the 2025 tax benefit from electing LIFO
    • 2025 taxable income reduction from LIFO (2025 LIFO expense/reserve): Multiply the year to date or annualized inflation rates shown in the 2025 inflation rate fields by last year’s inventory balance (or calculate a low & high range using both of the 2025 inflation rates shown)
    • 2025 LIFO tax benefit (2025 LIFO after-tax savings): Multiply the 2025 LIFO expense calculated above by your company or client’s combined federal & state marginal tax rate
    • 2025 LIFO return on investment (ROI): Divide the 2025 LIFO tax benefit amount calculated above by the 2025 estimated outsourcing cost (LIFOPro’s outsourcing fee range schedule is included in LIFOPro’s 2025 Top LIFO Election Candidates List & Tax Benefits Calculator)
    • 2025 outsourcing cost to LIFO tax benefit ratio: Divide the 2025 estimated outsourcing cost by the 2025 LIFO tax benefit amount
  • Step 5: Proceed with LIFO election scoping by taking any of the following steps:
    • Client outreach
      • Inform client they have been pre-screened as a good candidate for electing LIFO
      • Based on a high-level analysis, you’d estimate that LIFO could reduce taxable income or create a tax benefit of the amount calculated in step 4 (optional, but often useful in motivating clients to take further action on scoping out a LIFO election)
      • Inform client they can obtain the following to further explore a LIFO election & obtain a better estimate of the potential benefits and the overall requirements of using LIFO:
        • Complimentary LIFO election benefit analysis & outsourcing fee quote
        • Complimentary LIFO discovery call
      • Share the LIFO election benefit analysis questionnaire & document request list with them (or share LIFOPro’s contact information with them)
    • Contact LIFOPro
      • Schedule a complimentary LIFO discovery call for your client and/or firm to attend
      • Obtain benefit analysis questionnaire & document request to share with your client
      • Obtain complimentary LIFO election benefit analysis & outsourcing fee quote
      • Share your client’s contact information with LIFOPro to allow us to work directly with your client in scoping out a LIFO election & obtaining an outsourcing fee quote
      • Schedule a free LIFO discovery call to learn more about LIFO, how to obtain a free election benefit analysis & LIFOPro’s outsourcing solutions

LIFOPro’s Tax Benefits Calculator

LIFOPro’s Tax Benefits Calculator quickly pre-screens companies to determine if further LIFO election scoping should occur & calculates high-level cost-benefit estimates during the preliminary stages of the LIFO election scoping process. Usage steps are as follows:

  • Step 1: Download LIFOPro’s 2025 Top LIFO Election Candidates List & Tax Benefits Calculator
  • Step 2: Navigate to LIFO Tax Benefits Calculator sheet & enter the following input values into Cells B4: B10
    • Required input fields
      • Cell B4: Current period or projected year end inventory balance
      • Cell B5: Prior year end inventory balance
      • Cell B6: BLS PPI Code: Go to 2025 Top Election Candidates sheet, locate Column C PPI description that most closely matches your industry or product mix & enter corresponding Column B PPI Code into this cell.
    • Optional input fields
      • Cell B10: Combined federal & state marginal tax rate
      • Cell B11: Estimated Current Year Outsourcing Cost (See LIFOPro Outsource Fee Table)
      • Cell B12: Estimated Recurring Annual Outsourcing Cost (See LIFOPro Outsource Fee Table)
  • Step 3: Review Pre-screening output values in Cells B18:B19 to determine if further 2025 LIFO election scoping should be performed
    • If both criteria are met (Yes values returned in Cells B18 & B18): Proceed to Step 3 to perform additional 2025 LIFO election scoping
    • If 2025 Top LIFO Election Candidate Criteria is TBD: Reevaluate LIFO election scoping closer to year end
    • If 2025 Top LIFO Election Candidate Criteria is NO: Defer LIFO election scoping to 2026
    • If LIFO Preferability criteria is not met (No value returned in Cell B20): Do not proceed with further LIFO election scoping. LIFO is not preferable and should not be used.
  • Step 4: Proceed with further 2025 LIFO election scoping by taking any of the following steps:
    • Client outreach
      • Inform client they have been pre-screened as a good candidate for electing LIFO in 2025
      • Share any of the LIFO cost-benefit values calculated using this tool with client
      • Inform client they can obtain the following to further explore a LIFO election & obtain a better estimate of the potential benefits, costs & requirements of using LIFO:
        • Complimentary LIFO election benefit analysis & outsourcing fee quote
        • Complimentary LIFO discovery call
      • Share LIFOPro’s election benefit analysis questionnaire & document request list and/or share LIFOPro’s contact information with client
    • Contact LIFOPro to request complimentary LIFO discovery call, benefit analysis or to learn more

CPA Firm LIFO Election Scoping Client Target List

Sample CPA Firm LIFO Election Scoping Client Target List: Prepared by LIFOPro

LIFOPro offers complimentary LIFO election scoping client lists to seamlessly integrate LIFO into year-end tax planning, maximize your firm and client’s engagement in LIFO election scoping & minimizing the time/resources required to do so. Here’s how it works:

  • Firm builds client list containing the following information & shares with LIFOPro
    • Required fields
      • Client’s name or primary business activity: LIFOPro uses this information to match your client to a BLS category. LIFOPro will determine the business activity if you provide us your client’s name. The primary business activity can be found on the Form 1120/1065.
      • Client’s prior year end inventory balance: In some cases, this information will be readily available within your firm’s tax preparation or client resource management software.
    • Optional fields
      • Client’s tax filing status: Knowing whether the client is a Form 1120 vs. 1120S filer (S or C corporation) allows LIFOPro to assume a more accurate federal marginal tax rate, which in turn allows a more precise estimated LIFO tax benefit to be calculated for each client
      • Client’s state of incorporation: Allows LIFOPro to integrate the correct state marginal tax rate into each client’s estimated LIFO tax benefit
      • Client’s tax year end month: Allows LIFOPro to prioritize clients who should pursue a LIFO election
      • Client’s prior year income (loss) reported on tax return: Allows LIFOPro to prioritize clients who should pursue a LIFO election
    • LIFOPro builds CPA firm LIFO election scoping pre-screening & high-level benefit analysis list containing the following fields:
      • Pre-screening fields
        • LIFO is preferable: Pre-screens clients to determine whether or not they’re eligible to perform LIFO election scoping based on LIFOPro’s preferability KPIs. Allows firms to rule out clients that shouldn’t scope LIFO elections, and ensure firm resources aren’t spent on suboptimal LIFO election candidates.
        • Top 2025 LIFO Election Candidate: Pre-screens clients to determine if LIFO election scoping should occur this year. Also allows firms to rule out clients that should defer LIFO election scoping to a future period.
        • 2025 LIFO Scoping priority: Grading scale assigned by LIFOPro to each client based on the value of each LIFO election opportunity. Allows CPA firms to prioritize where resources should be first devoted towards LIFO election scoping.
      • High-level Cost-benefit analysis fields
        • 2025 LIFO expense: This value is the 2025 taxable income reduction if LIFO were elected this year. It is the product of the prior year end inventory balance & the current year annualized inflation rate.
        • 2025 LIFO tax benefit: This value is the 2025 reduction in federal & state income taxes if LIFO were elected this year. It is the product of the 2025 LIFO expense & the combined federal & state marginal tax rate.
        • Forecasted average annual LIFO expense: This value is a forecast of the future average annual taxable income reduction from LIFO.
        • Forecasted average annual LIFO tax benefit: This value is a forecast of the future average annual LIFO tax benefit. It’s provided to forecast LIFO’s mid-long term tax benefit & also estimate KPIs such as ROI when taking into account the recurring annual LIFO calculation outsourcing costs.
        • Outsource fee ranges: LIFOPro’s estimated first year & recurring annual outsourcing costs. Provided to assist clients in assessing LIFO’s benefits vs. costs, and give clients the required incentive to pursue exploring a LIFO election.
        • LIFO ROI ranges: Is the multiplier value of the 2025 and forecasted average annual LIFO tax benefit. Low & high ranges provided. To be used during preliminary stages of LIFO election scoping process to incentive clients to obtain complimentary election benefit analysis & outsourcing fee quote from LIFOPro.

Steps to take following obtaining your CPA firm’s LIFO election scoping client target list are as follows:

  • Identify clients who should be contacted to pursue a 2025 LIFO election by filtering list to only include clients with a Yes value in the Column G Top 2025 LIFO Election Candidate field
  • Prioritize clients who should be contacted first to regarding LIFO election scoping by sorting Column H 2025 LIFO Scoping Priority field highest to lowest
  • Contact your client to perform preliminary LIFO election scoping
    • Inform client they have been pre-screened as a good candidate for electing LIFO in 2025
    • If desired, share any of the election scoping outputs provided in Columns I:N (optional, but often incentives clients to proceed with scoping out a LIFO election and/or obtaining benefit analysis)
    • Inform client they can obtain the following to further explore a LIFO election & obtain a better estimate of the potential benefits, costs & requirements of using LIFO:
      • Complimentary LIFO election benefit analysis & outsourcing fee quote
      • Complimentary LIFO discovery call
    • Share the LIFO election benefit analysis questionnaire & document request list and/or share LIFOPro’s contact information with client
  • Contact LIFOPro to obtain complimentary LIFO election benefit analysis & outsourcing fee quote
    • Request for LIFOPro to host a complimentary LIFO discovery call for your client and/or firm to attend
    • Obtain benefit analysis questionnaire & document request to share with your client
    • Share your client’s contact information with LIFOPro to allow us to work directly with your client in scoping out a LIFO election & obtaining an outsourcing fee quote
    • Send required documentation to obtain complimentary LIFO election benefit analysis & outsourcing fee quote
  • Schedule a free LIFO discovery call to learn more about LIFO, how to obtain a free election benefit analysis, outsourcing fee quote & learn more about LIFOPro’s outsourcing solutions:
    • Email/call Bob Richardson at robert@lifopro.com or at 531-466-4275
    • Schedule a Microsoft Teams meeting using our online tool: https://live.vcita.com/site/smleud97dkmgnkd9/online-scheduling

2025 Top LIFO Opportunities & Strategies Guide
2025 CPA Firm LIFO Election Scoping Guide
2025 Top LIFO Election Candidates & Tax Benefit Calculator
How LIFO Works & LIFOPro's Offerings
LIFO Election Benefit Analysis