Is there a limitation on expense deduction for conservation expenses related to the Eqip program? Pub 225 on page 30 says yes there is limitation of 25%? It is unclear?

It depends. You can either deduct expenses for soil and water conservation or adjust your basis in the property. The method you choose the first year you incur conservation expenses is the method you generally must stick with. You need formal approval from the IRS to change your method from taking the expense to capitalizing or vice versa. 

If you take the expense, you cannot deduct more than 25% of your gross farming income for conservation expenses. Therefore, if your gross farming income is $100,000 for the year, you can only deduct $25,000 for conservation expenses. Keep in mind that gross income for these purposes does not include gains from the sales of assets (machinery) or the disposition of land. 

Furthermore, you can carryover any conservation expenses that you are not allowed to deduct because they total more than 25% of your gross farming income. However, the deduction in future tax years is also limited to 25% of the gross income for that year as well. 

Generally, you must include all income from government payments for conservation practices, such as Eqip. However, you are allowed to exclude from your income part or all of money received if you capitalize your conservation expenses and meet two other tests as described here. You can only do this if you do not take the expense. 

The 25% limit controls how much you can deduct this year. It is not an overall limit on the deduction, just when you can take it.

For example, churches have a 60% limit--if your income is $100,000, you could theoretically donate $60,000 to your church and claim the entire amount as an itemized deduction on schedule A.  However, since conservation expenses have a 25% limit, if your income is $100,000 and your expenses are $60,000, you can deduct $25,000 this year and the rest will carry forward (Turbotax does this automatically).