Taxes

SDRP Double‑Up Payment Rules Explained

Tue, 12 May 2026 20:46:02 GMT

Paul Neiffer, host of the Top Producer Podcast, discusses the Supplemental Disaster Relief Program (SDRP) and its “double-up” payment rules.

“I call it the double up. Typically, we call it a top up but, but they essentially doubled it up,” he says. “Our first initial payment was 35% and then this double up is on top of it, another 35% and for many of you, it’s going to be exactly what you got into the first one.”

Neiffer mentions that $11.7 billion has been paid out so far, with $12.5 billion expected in total between Stage 1 and Stage 2. With the program deadline being extended to August 12, 2026, Stage 2 farmers will continue to receive funds as USDA updates its database.

USDA allocated $16.09 billion to the program. If total payments reach $12.5 billion, approximately $3.5 billion remains for:

Payments for applications submitted by the August 12, 2024, deadline, including Stage 1 and Stage 2 quality losses.
A potential final “top-up” for producers.

“The reason [the total payout is less than the allocation] is a lot of farmers are going to hit the payment limits,” Neiffer says. Payment limits are $125,000 per year for regular crops and $125,000 for specialty crops. However, if more than 75% of your adjusted gross income (AGI) is farm income, those limits increase. “Before any of the 75% [test], that means you qualify automatically for $250,000 combined between ’23 and ’24 [for regular crops],” Neiffer explains.

Equipment gains and custom farming income remain “the rub” for qualification. Neiffer notes that currently, equipment gains may disqualify some from the 75% farm income test. While the “One Big Beautiful Bill Act” will make equipment gains automatically count as farm income starting in the 2026 crop year, that change does not apply to SDRP for ’23 and ’24.

Neiffer estimates a potential final top-up distribution of 5-10% could occur once all initial payments are settled. “Congress only authorized paying out up to 90%, so the most you can get is 20% [more]... I think the reality is we’re maybe looking at 7, 8, 9, somewhere between five and 10%.”

4 Things Farmers Should Know About A Lesser-Known Tax Deduction

Mon, 13 Apr 2026 16:29:47 GMT

“This is something I’ve been talking about since 1992, but all of the sudden in the past five years, people thought it came out of nowhere,” says Roger McEowen, professor at Washburn University School of Law.

McEowen is referring to the residual soil fertility deduction, which the IRS provided comments—while not official guidance—on how landowners can deduct the value of excess soil fertility applied on recently acquired land.

“With the run-up in land values, there is a lot more interest than six years ago. This isn’t new, but it’s like pouring gas on a fire,” McEowen says.

When purchasing farmland, a portion of the purchase price can often be attributed to “residual fertility"—nutrients already present in the soil from the previous owner’s applications that exceed the base levels.

CropQuest, a soil testing business based in Kansas, has been doing reports for this tax deduction since 2020.

“It probably doubles every year or more,” says Nathan Woydziak, precision ag manager at Crop Quest. “Today, we’re doing this testing for hundreds of farmers across our service area.”

Who Qualifies for the Deduction?

Only the owner of the farmland (or pastureland) qualifies for the deduction, and the land must be used for agricultural production. Second, the land needs to have been purchased or transferred with stepped-up basis recently.

What Drives The Value of the Deduction?

“The big driving force is time of purchase,” says Adam Brenneman, a sales representative at Boa Safra Ag, which produces the required soil fertility reports. Boa Safra advises landowners consider any acquisitions since 2010.

“We won’t survey properties older than 2000,” Brenneman says. “For example, our averages for properties are around $1,000 to $1,700 an acre for the value of the deduction, but if it’s acquired in 2005 would be around $300 an acre, 2000 gets closer to $150 per acre.”

In this process, it’s the market value of nutrients multiplied by your excess.

“The deduction based on your excess nutrient load in the property since time of purchase. When you bought the property, you bought the structure and geographic space, you also bought the 8” zone in the soil of where agriculture takes place. The nutrients in that zone, any of them, above baseline are able to be part of the deduction process,” Brenneman says.

What’s Required to Document the Deduction?

Farmers should maintain detailed records, including the purchase agreement, soil test results, and the methodology used to calculate the dollar value of the nutrients.

For the soil test, this includes macro and micronutrients. For example, the Crop Quest and Boa Safra reports detail 11 soil nutrients.

“Good documentation is key. We’ve done some where we went back in history on those fields but regularly we go back 5 years. And your accountant has to be on board,” Woydziak says.
To claim this deduction, you must prove that the nutrient levels are “excessive” compared to a standard baseline.

How is the Deduction Filed?

If land is in a trust, S corp or LLC, the deduction applies to the ownership of the property. And it’s up to the accountant to determine the schedule of the depreciation, which is commonly applied across three to seven years.

“There is no code section. The only guidance we have is the scant things IRS said 34 years ago,” McEowen says. “Have the soil analysis done as close to the time of acquisition as possible. That’s the most bullet proof thing if the IRS challenges it with an audit.”

McEowen says some tax professionals will not include these deductions because of the lack of clarity from the IRS.

“We aren’t sure if it’s depreciation, depletion, or amortization. I think it’s depletion. It’s a natural resource like oil and gas. Fertility gets mined over time. So the theory is you are entitled to the deduction in the nutrient deposit in that soil. So most tax professionals just massage this in as depreciation. And some will put it in section 180 and then separately track it. I don’t know if it’s the wrong or right approach. But that’s as good as we can do.”

Brenneman emphasizes this is a process that requires a team of professionals.

“We don’t do tax advice. We work in the dirt,” he says. “Our audit rate is less than 2%. We stand behind our reports within your auditable years. And we have a 100% audit defense success rate.” Brenneman says.

McEowen adds, “I foresee a statute from Congress and IRS writing rules to carrying out the statute. It could be in the reconciliation bill or the skinny farm bill. That’s the approach I think is going to happen. We need a statute.”

Inside The Tax Return of Your Farm's Future

Thu, 09 Apr 2026 12:59:16 GMT

The traditional process of preparing agricultural tax returns has long been defined by manual data entry and the complex reconciliation of income. However, the integration of artificial intelligence into financial systems is ushering in a more sophisticated era of tax management. For the modern farm, the future of filing lies in a seamless pipeline where software handles the heavy lifting of data organization, leaving the high-level strategy to human experts.

Comprehensive Data Integration

The foundation of a modern tax return is the accounting system. Platforms like QuickBooks, Xero or specialized farm management software are becoming increasingly autonomous. In the near future, these AI agents will do more than simply record expenses; they will analyze them in real-time.

With direct links to bank feeds and digital invoices, AI can categorize expenditures with precision. It can distinguish between capital investments, such as machinery or land improvements, and standard operating costs like seed and fuel. This continuous synchronization means by the end of the fiscal year, the financial records are already in a format that mirrors the requirements of a tax return.

Automated Document Reconciliation

A significant portion of tax preparation involves matching — ensuring the farm’s internal records align with the documents issued by third parties. A preparer of a farm tax return may spend more time making sure all of the income is in the right box then planning to optimize the income tax level.

AI is uniquely suited to handle this high-volume verification. The system can automatically ingest Form 1099-PATR (cooperative distributions), 1099-G (government subsidies) and other Form 1099s and W-2s and verify them against recorded deposits.

If a document is missing or a figure does not match the ledger, AI identifies the specific discrepancy immediately, allowing for a targeted correction rather than a manual search through months of records.

The Role of Human Oversight

While AI provides the technical framework for the return, the final stage remains firmly in human hands. Once the software has mapped the data to the appropriate tax schedules, it produces a comprehensive draft for professional review.

This allows the farmer or a tax consultant to transition from a data entry role to a strategic advisory role. Instead of spending hours verifying line items, the human reviewer can focus on critical tax planning decisions including accelerated depreciation choices or income averaging that require professional judgment and an understanding of the farm’s long-term goals.

The result is a more accurate, defensible and efficient tax filing process. By automating the clerical aspects of the return, AI allows agricultural producers to maintain focus on their operations while ensuring full compliance with the evolving tax laws.

One Big Beautiful Bill Might Force Farmers to Rethink Farm Business Structures

Tue, 10 Feb 2026 15:02:08 GMT

At a time when farm income is under growing pressure, the One Big Beautiful Bill is reshaping the farm safety net in ways that go well beyond bigger checks or better crop insurance coverage. According to Farm CPA Paul Neiffer, the legislation could quietly push producers toward fundamental changes in how their farm businesses are structured, decisions that could have long-term implications for taxes, payments, and succession planning.

While the bill was signed into law in July of 2025, there’s still guidance that needs to be set before farmers can make vital decisions. And some of the most favorable changes- like to crop insurance coverage- won’t go into effect until late this year.

While much of the early conversation around the bill has focused on higher reference prices and stronger crop insurance subsidies, during the 2026 Top Producer Summit, Neiffer told attendees the real impact may not be fully understood yet, and farmers should be paying close attention.

“This bill changes the rules we’ve all been operating under for the last 20 years,” Neiffer says. “And when the rules change, the structure of the farm suddenly matters a lot more than it used to.”

Financial Stress Is Already Building in Farm Country

The bill arrives against a backdrop of tightening farm finances. USDA’s updated net farm income forecast showed a sharper-than-expected decline for 2025 , with early projections for 2026 offering little comfort, particularly for row-crop producers, a trend doesn’t surprise Neiffer.

“It peaked out in 2022, and it’s definitely been going down ever since,” he explains. “If you’re a row-crop farmer, 2026 is probably going to look a lot like 2025 unless something changes on the price side.”

While government payments will help stabilize income, Neiffer is blunt about what would happen without them.

“Without ARC, PLC, the FSA payments, the SDRP top-ups, without all of that, most row crop farmers would absolutely be struggling right now,” he says.

Payments tied to the One Big Beautiful Bill are expected to start flowing in October, providing a critical backstop during a period when margins remain thin and balance sheets are tightening across large parts of the country.

Crop Insurance: One of the Bill’s Biggest Wins

Neiffer gives the crop insurance provisions in the One Big Beautiful Bill high marks , calling them one of the clearest positives for producers.

“I’d give it a B-plus to A-minus,” says Neiffer.

Why such a high grade? The bill boosts premium subsidies across most revenue protection levels:

Coverage levels from 55% to 75% receive a 5 percentage-point increase in premium subsidies.
80% and 85% coverage levels see a 3 percentage-point increase.
Supplemental Coverage Option (SCO) now extends up to 90% coverage, and farmers can now pair ARC with SCO, something previously prohibited.
SCO subsidies jump from 65% to 80%, making higher coverage far more affordable.

For many producers, especially wheat growers, these changes significantly reduce out-of-pocket costs while expanding protection.

Beginning farmers also receive a major boost. Previously limited to a 10% premium subsidy bump for five years, the bill expands the benefit to 10 years, with even higher subsidies in the early years.

“For young farmers, it can now make financial sense to farm on their own instead of with their parents,” Neiffer said. “From a family standpoint, they’re actually going to make more money.”

Prevent Plant Still a Pain Point

Not everything is a win. One of the main reasons Neiffer doesn’t give the crop insurance changes a straight A is because of changes to prevent plant, something that remains a concern, especially in high-risk regions like Arkansas and the Dakotas.

Under previous rules, farmers could buy up an additional 10% of coverage. That was later reduced to 5%, and Neiffer says USDA’s Risk Management Agency is still discussing cutting or eliminating that option entirely.

“That extra 5% really matters when you’ve got too much water,” he said.

While not enough to outweigh the bill’s positives, the issue drags down what could otherwise be a near-perfect crop insurance package.

Beginning Farmers See Expanded Incentives

The bill also significantly expands benefits for beginning farmers, extending premium subsidy incentives from five years to ten , while also increasing the subsidy percentages in the early years.

“Before, they got a 10% bump, but only for five years,” Neiffer says. “Now it’s 15% in years one and two, 13% in year three, 11% in year four, and 10% all the way through year ten.”

That change, he says, could alter how farm families bring the next generation into the operation.

“For a lot of young farmers, it may actually make more sense financially to farm on their own instead of farming with their parents,” Neiffer says. “If they’re part of the parents’ operation, they may or may not qualify for those premium subsidies. On their own, they do.”

From a purely financial standpoint, Neiffer says some families could generate more income overall by restructuring how younger operators enter the business.

Prevent Plant Remains a Lingering Concern

Despite the positives, not every provision landed well with producers. Prevent plant coverage remains a contentious issue, particularly in regions prone to excess moisture.

“Under the old rules, you could buy up an extra 10% of prevent plant coverage,” Neiffer adds. “That got cut to 5%, and now RMA is still talking about cutting or eliminating that extra 5% altogether.”

For producers in places like Arkansas and the Dakotas, that reduction matters.

“When you’ve got too much water, that extra coverage helps mitigate a really bad situation,” he says. “Losing it would hurt.”

Even so, Neiffer says the overall crop insurance package remains strong.

“That’s really the only thing dragging it down just a little bit,” he said.

ARC and PLC Changes Offer Ongoing Protection

Beyond insurance, Neiffer points to ARC and PLC changes as one of the most important income stabilizers in the bill, especially because they are designed to work over time, not just in a single marketing year.

“The increase in reference prices and effective reference prices isn’t a one-shot deal,” he says. “It happens this year, it happens next year, and it keeps happening as long as prices stay depressed.”

The bill also includes what Neiffer describes as an “automatic put” built into ARC and PLC, designed to cushion farmers during prolonged periods of weak prices.

“That’s going to help smooth out income over multiple years, and right now, that’s exactly what farmers need,” says Neiffer.

The Structural Shift Farmers May Not Be Ready For

The most overlooked part of the One Big Beautiful Bill, and potentially what may be the most consequential part of the legislation, is how it changes payment limits tied to farm business structure.

Under old rules, LLCs and S corporations were often limited to a single payment cap. The new law shifts that framework, allowing multiple payment limits based on the number of equal owners , depending on how the operation is structured.

That opens the door to significant restructuring. According to Neiffer:

General partnerships may move to LLCs for liability protection and expanded payment eligibility.
C corporations, which remain stuck with a single payment limit, may convert to S corporations.
Some farms are already making the switch.

“I’ve talked to several farmers already that either have switched or will be switching,” Neiffer says. “And it’s completely because of the One Big Beautiful Bill.”

Still, he urges caution. USDA guidance on how these new rules will be applied has not yet been released.

“Before I tell anyone to change their structure, we need that guidance,” Neiffer says. “Otherwise, you risk unintended consequences that wipe out the benefit.”

A Note of Caution on Taxes and Spending

Neiffer also warns producers not to let tax provisions drive equipment purchases or expansion decisions.

“There are a lot of good tax provisions in this bill,” he said. “But farmers tend to get hooked on them.”

He points specifically to bonus depreciation as an area of concern.

“They go out and buy something just because they can deduct it,” he says. “If they finance it with debt, they don’t always think about what happens the next year, or the year after that, or the year after that.”

The result, he says, can be financial strain that lasts long after the tax benefit fades.

Guidance Still Needed Before Big Decisions

Despite the potential advantages of restructuring, Neiffer urges farmers to have patience. USDA guidance on how the new payment limit rules will be applied has not yet been released.

“Before I’m telling anybody to change their structure, we really need that guidance,” he says. “I worry about the law of unintended consequences, where we think the rule is going to work one way, and then something else kicks in and negates the benefit.”

Farmers were expecting clarity by the end of 2025. That hasn’t happened yet.

“We’re already almost to March,” Neiffer says. “But we should have it any day now.”

When it arrives, Neiffer believes it could prompt some of the most significant farm business decisions producers have faced in years , driven not just by markets, but by policy.

How the $15 Million Estate Tax Exemption Changes Your Farm Succession Strategy

Mon, 26 Jan 2026 20:01:08 GMT

The world of estate planning for farmers has changed dramatically after the passage of the One Big Beautiful Bill Act. This permanently increased the lifetime gift and estate tax exemption to $15 million indexed starting Jan. 1. With the federal estate tax exemption at historically high levels, most family farms are no longer at risk of paying federal estate tax. However, this shift has brought a new focus to income tax planning and the importance of preserving the step-up in basis at death.

Understand the Step-Up in Basis

When a person passes away, the value of their property is generally reset to its fair market value at the date of death. This is known as a “step-up in basis.” For farm families, this is a crucial benefit. Farmland and other agricultural assets often appreciate significantly over time. If heirs inherit these assets, they receive them at the new, higher value. This means that if they later sell the property, they will owe little or no income tax on the appreciation that occurred during the original owner’s lifetime.

Why Estate Tax Is Less of a Concern

With the current high exemption, only the largest farm estates face federal estate tax. For most families, the bigger risk is not estate tax; it’s the potential for large income taxes if the step-up in basis is lost. This can happen if assets are given away during the owner’s lifetime, rather than being passed on at death.

The Pitfalls of Lifetime Gifting

Many farmers consider making large gifts during their lifetime, worried that the estate tax exemption will drop in the future. While this can be a good strategy for very large estates, it can be costly for smaller farm operations. When assets are gifted during life, the recipient takes over the original owner’s basis, which is often much lower than today’s value.

If the recipient later sells the property, they could face a significant income tax bill. In contrast, if the property is inherited, the basis is stepped up to current value, minimizing or eliminating income tax.

Likely the best asset to gift during lifetime is farmland that will be retained in the family for multiple generations. The step-up in this case is not as valuable because we can’t depreciate farmland, and if it is not going to be sold, the heirs are not worse off. Plus, appreciation in farmland can be very volatile and could cause the farm couple to owe estate tax.

Hidden Cost of Gifting Negative Capital

Many farm operations are structured as a partnership for income tax purposes and farms with debt will typically create what is called a negative capital account and, in many cases, this can easily exceed $5 to $10 million for larger farm operations. Gifting any interest in these partnerships during a lifetime will create ordinary income to the farmer because the “debt” eliminated exceeds the basis in the partnership’s assets, which is typically zero. Whereas holding until death eliminates the tax for their heirs. However, a drawback is that the older generation might still be on the hook for the debt until they pass.

For the vast majority of farmers, estate tax planning is now about smart income tax planning. Preserving the step-up in basis at death can save heirs substantial taxes and help keep the family farm in the family. Careful planning today can help protect your family’s legacy for generations to come.

Paul Neiffer has been tracking the latest in tax policy and government programs. Learn more about what you should factor into your farm business and potential tax implications at Top Producer Summit, Feb. 9-11 in Nashville. View the agenda and register today !

Plan for Now, Adjust Later: Create Your Estate Plan Before It's Too Late

Wed, 22 Oct 2025 17:05:37 GMT

Nobody wants to think about death, but it’s something Polly Dobbs, an estate planning and wealth transfer attorney with Dobbs Legal Group LLC, thinks about every day.

“When I was a new lawyer, I was so nervous to say dead or death,” Dobbs recalls. “I was in a meeting with a partner and his client once when I stumbled over something and said, ‘in the unfortunate event you should pass away.’ After that meeting, the partner yanked me out in the hallway and said, ‘Stop stuttering. Just say when you die. It’s not if, it’s when.’”

She’s been dealing in death ever since, but she says that perspective allows her to serve her clients better.

“What if you got hit by a bus tomorrow?” Dobbs asks. “You should have a plan in place that fits today’s circumstances. If your grandson is playing with John Deere toys in the sandbox, let’s not create a succession plan that hinges on that grandson coming back to farm. Let’s have a plan in place that fits right now, in case you die tomorrow. If you don’t die and you get to see how those grandkids turn out and which direction their lives take, you can adjust that plan.”

People often think they can figure out their estate plan later – when they are older, richer, sicker, free from debt and the list goes on.

“Too often, people don’t have a plan, and they end up dying before they’ve got it just how they want it,” Dobbs says. “Have something that fits for today and dust it off as needed.”

What Should Drive Decisions?

When it comes to estate planning, Dobbs says there is no cookie-cutter-approach.

“You can’t copy what your neighbor did,” she says. “It has to be customized for your family, your facts, your assets, your goals, your family members and your farm.”

She often challenges farmers with tough questions like should your off-farm kids get bought out?

“Should they get bought out of equipment, improvements, grain bins, shops, shed and all of the silver things that we build on top of gravel lots to use in production agriculture?” she asks. “Do you feel like your off-farm heirs are entitled to a share of these operating assets? If so, fine. If not, that’s OK, too.”

Part of what Dobbs does is give permission to people to treat their children differently and to define their children’s inheritance.

“It’s not necessarily one quick check after an auction after your funeral,” she points out. “It is absolutely fine to treat your children differently. I preach over and over again that fair does not mean equal. There is no law that says the columns for your children must tally to the penny and be exactly equal with the assets they receive at your death. You’re aiming for a fair balance, and you define what is fair.”

Ultimately, she says, it comes down to peace of mind when you lay your head on the pillow. Do you have a fair plan in place?

Talk Now, Don’t Wait

Communicating the estate plan during your lifetime is very important, but it’s often the step that farmers fail to complete. She says transparency helps avoid entitlement.

“When someone thinks they’re going to get a certain amount of the value of your assets, they’re already calculating it and counting on it,” she says. “After your death, if the plan is different, that’s when the entitlement rears its head.”

She emphasizes the details must be defined by the farmer.

“A lot of my clients would rather put their head down and have the plan unveiled after death,” Dobbs says. “I understand that’s challenging. But it’s far better to have transparency and throw everything out on the conference room table so you can shine a light on it and talk about it.”

In addition to getting all the family in the room, Dobbs believes there should be more than one adviser at the table at a time.

“This is how you get the best plan, and you will always have a better plan if your advisers speak to each other,” she adds. “There is this falsehood out there that you need to stop your lawyer from talking to your accountant because that means they’re both charging you at the same time. I promise it will always be cheaper in the end, and a better plan, if your advisers talk to each other.”

Touchy Subjects

One of the sensitive subjects many farmers are dealing with today is the issue of sweat equity and treating it like deferred compensation, she says.

“When we have a successor coming in, depending on how long that successor has been working side by side with the senior generation, they’ve earned something,” Dobbs says. “We’re not talking about giving them a handout. If we give them a discounted price, or we give them assets off the top as a part of the succession plan or part of the estate plan, that’s not a handout.”

Deferred compensation says that if a young person had gone to work in a factory right out of school, they would be earning and investing in a 401K or perhaps stock compensation. They probably would have health insurance and HSA accounts that most family farms just don’t have, she explains.

“When the senior generation is putting together their succession and estate plan, consider the benefits the successor gave up by not working off farm,” she says. “Having some sort of benefit, discounts, family-friendly terms in the succession plan and in the estate plan should be considered deferred compensation.”

Read More:
Tax Acts and Estate Plans: What You Need to Know About the Changes for 2026

Tax Acts and Estate Plans: What You Need to Know About the Changes for 2026

Mon, 20 Oct 2025 14:00:40 GMT

Taxes don’t destroy family farms – people do, says Polly Dobbs, an estate planning and wealth transfer specialist.

“It’s not Uncle Sam – it’s your third wife and your kids from your first two wives, it’s your kids in the city versus your kids on the farm, and it’s ultimately your failure to plan for all that because you don’t want to hurt somebody’s feelings,” she explains. “It’s very lazy to say that taxes ruin the farm. That’s rarely the case.”

All the details matter, says Dobbs with Dobbs Legal Group LLC. She doesn’t believe in sugarcoating the hard truth. That’s why she’s devoted her career to helping farm families navigate estate planning and wealth transfer.

A “Permanent” Estate Tax

On July 4, President Donald Trump signed into effect the One Big Beautiful Bill, which has a significant effect on federal taxes, credits and deductions.

When it comes to gift and estate taxes, Dobbs points out a big change under the Internal Revenue Services (IRS) section.

“The new exemption as of Jan. 1, 2026, will be $15 million per person, or $30 million for a married couple,” she said at the Keystone Cooperatives Co-op Classic in Valparaiso, Ind. “It is one exemption. You either use it during your lifetime to make gifts, or you have it available at death to shield inheritances. You don’t get two.”

This is an increase from $13,990,000 per person in 2025, and a welcome relief from the anticipated “drop off the cliff to around $7 million per person that was looming,” Dobbs adds.

Unlike the Tax Cuts and Jobs Act from 2017, she says the exemption is considered permanent in that it doesn’t have a “self-destruct, sunset date.” However, she warns farmers not to get too excited about the “permanent tax act” because any future Congress and President can change any law on the books.

The new exemption will be indexed to inflation, she adds, and with adjustments made Jan. 1 every year beginning in 2027. IRS recently announced the tax year 2026 annual inflation adjustments for more than 60 tax provisions, including the income tax rate schedules and other tax changes. The annual gift tax exclusion will remain $19,000 in 2026, unchanged from 2025, which is the amount each donor can give to each recipient, without tapping into his or her big exemption.

“During the fourth quarter of every year, we’ll get inflation numbers, and we will know what the new exemption is going to be the following January,” Dobbs says. “It is nice to know there’s no ticking clock on this tax act. We can stop worrying about this dreaded sunset that was to happen at the end of 2025. The fact they got ahead of this and did it in July of 2025 is a gift.”

Dobbs has been working in gift and estate tax laws for 25 years and says there has never once been a permanent tax act.

“This is important information,” she says. “But that’s the caboose. It is not the engine that should be driving the decision making about the farm’s succession and estate planning. Family goals come first.”

Are Large ARC/PLC Payments Coming?

Mon, 06 Oct 2025 13:08:38 GMT

The One Big Beautiful Bill Act increased the statutory reference price and also made some enhanced changes to the effective reference price (EFR).

The EFR is used to calculate payments under Price Loss Coverage (PLC) and also affects the benchmark price used in the Agricultural Risk Coverage (ARC) calculations.

Instead of using 85% of the Olympic Average of the previous five years of MYA prices, the new calculation uses 88%, which effectively increases the EFR for many commodities. The old cap of 115% of the statutory reference price remains. However, with a larger increase in statutory reference prices, all commodities have seen an increase in the EFR that will be used to make either PLC or ARC payments. The increase can be substantial.

What This Means For Farmers
About 70 million base acres were enrolled in PLC for 2025 and about 172 million acres for ARC. There were around another 30 million base acres not enrolled due to ineligible crops or the farmers electing to not participate.

Many farmers were concerned the changes to ARC and PLC would penalize them if they made the wrong election for 2025. Congress understood this dilemma and added a provision to automatically pay the higher of ARC or PLC — but only for the 2025 crop year.

Another issue for many farmers has to do with the payment limit. If there was no increase, then many farmers would not get any extra payments. So, Congress fixed this partially by:

• Increasing the payment limit to $155,000 (indexed to inflation starting with the 2026 crop)

• Allowing LLCs and S corporations to have multiple payments similar to what general partnerships can do

If the projected MYA prices as of late-August hold, then minimum estimated payments for the major crops for next October would be:

• Corn – $5.7 billion

• Wheat – $2.25 billion

• Cotton – $1.3 billion

• Soybeans – $1.1 billion

• Rice – $871 million

• Total Crops – $12.5 billion (up from $5.60 billion under the old rules)

Because many areas could see higher ARC payments than PLC, final payments might be higher. These payments reflect the payment based on 85% of base acres but do not reflect farmers with payment limits.

The bottom line is farmers will receive more payments under the changes, and the increase could be significant.