Payment and Tax Changes in OBBBA
From the Ag Information Network, I’m Bob Larson. Payment limit relief and new tax breaks will help producers this season under the president’s tax and spending bill, the One Big Beautiful Bill Act.
Among the big changes is that the payment cap for individual members of a corporate farm entity rises from $125 thousand to $155 thousand dollars, indexed for inflation. And all pass-through entities are treated the same.
Undersecretary for Farm Production and Conservation Richard Fordyce …
FORDYCE … “Partnerships, S-Corporations, LLCs, Joint Ventures, and General Partnerships.”
Allowing each member to now receive a payment in proportion to their ownership share and material participation.
Only General Partnerships had qualified before, with a June 1st deadline for farm entity changes with FSA …
FORDYCE … “We’re going to waive that June 1st rule and allow folks to properly align their business entities, so that they can take advantage during the 2026 crop year.”
Separately, the One Big Beautiful Bill Act included new tax breaks. The 20% Qualified Business Income, or QBI, deduction is now permanent for sole proprietors and pass-throughs. The new minimum QBI deduction is $400 dollars for those who materially participate in those farms.
The law allows for more immediate write-offs for equipment purchases and increases the state and local tax deduction cap. Plus, there are new guidelines for managing taxable crop insurance and disaster relief payments during difficult years, of which 2026 is shaping up to be another.
