President Trump signed the One Big Beautiful Bill (BBB) on Friday July 4, 2025. Here’s an outline of some of the key details farmers need to know. Reference prices and the calculating of effective reference prices get across the board increases and will likely lead to an additional $10 billion of support in 2026.
Many farmers operate their farm as either an LLC or S corporation to save on self-employment taxes and to provide additional legal protection. However, a general partnership provides benefits for farm program payments purposes that an LLC or S corporation does not. The BBB now provides equality for LLCs and S corporation with general partnerships.
Let’s look at an example:
- The ABC Farm LLC has three equal owners, all active participants in the farm operation.
- The LLC qualifies for $500,000 of payments for the 2024 crop year.
- Prior to the BBB, the LLC was limited to $125,000 of payments.
- If ABC Farm had been a general partnership, then the payments would be limited to $375,000.
- After the BBB, the LLC will qualify for $375,000.
Under pre-BBB rules, farm income typically did not include gains from selling farm equipment. FSA required your other farm adjusted gross income (AGI) to exceed 66.66% of total AGI. The BBB fixes this by simply stating gains from selling farm equipment is farm income along with agri-tourism and the direct-to-consumer marketing of agricultural products.
Crop insurance premium support will get an extra 3-5% increases on subsidies and beginning farmers will now get enhanced premium support for 10 years instead of five.
A farm couple starting in 2026 can now be worth $30 million ($15 million each) and owe no federal estate tax. This will be indexed to inflation and with very simply planning you can easily be worth $40 million and owe no federal estate tax.
Farmers can now take advantage of 100% bonus depreciation for assets placed in service after January 19, 2025, and Section 179 has been bumped to $2.5 million for 2025.
The state and local tax (SALT) limit has been temporarily increased to $40,000 through 2029. However, if your AGI exceeds $600,000, it drops back to the current $10,000 limit. Farmers can continue to fully deduct state income taxes that are paid by a pass-through entity (at least in most states).
The extra 20% Section 199A deduction for next farm income is made permanent with some small enhancements.
Farmers and their spouses aged 65 or older will get an extra $6,000 deduction (each) but only for four years and this will phase out as your income goes over certain levels.
This has been a review of some of the key changes from the BBB and I would grade this Bill as a B+ for most farmers.
