New Bill Enhances Crop Insurance and Commodity Payments and More

After a two-year delay, reauthorization of the nation’s Farm Bill was achieved with Congress’ passage of the massive tax and policy legislation signed by President Trump on July 4, 2025.

A Republican version of the new Farm Bill was rolled into the One Big Beautiful Bill Act (OBBBA), enabling it to be passed via the Senate’s reconciliation process.

Highlights of the Farm Bill include approximately $66 billion in new spending over 10 years, which will primarily support:

  • Expanded commodity program payments, including extension of PLC and ARC through 2031.
  • Enhanced crop insurance subsidies, including higher statutory reference prices (SRPs) for major crops including corn, wheat and soybeans.
  • New base acre allocations, including one-time allocation of up to 30 million new base acres for producers with insufficient or no base acres starting in 2026.
  • Increased payment limits from $125,000 to $155,000, with inflation indexing starting in 2025.
  • Updated dairy and conservation programs, including extension of Dairy Margin Coverage through 2031.

In addition to the Farm Bill provisions, farm owners and ranchers will benefit from general tax provisions of the OBBBA, including a permanent deduction of state income taxes for pass-through entities, a permanent estate tax exemption of $15 million (indexed for inflation) and restoration of 100% bonus depreciation.

Further, the new law relaxes rules on tax payments for sales of farmland to a qualified farmer, allowing payments to be made in four annual installments. For banks the law also allows a 25% exclusion of interest received on new loans they issue secured by agricultural land. This may start to give banks the ability to be more competitive on their agricultural real estate loan rates as compared to credit unions, which do not pay taxes. The borrower’s deduction is reduced proportionately.

Since 2022, claiming Research and Development (R&D) income tax credits required the calculated cost of qualified R&D activities to be capitalized and amortized over five years (15 years for international activities) rather than expensed. The OBBBA law restores immediate expensing for R&D costs and makes it permanent.

Reauthorization Overdue

The nation’s Farm Bills have evolved over the past century, since the first federal programs to help farmers were created in the 1920s during an agricultural depression.

Today, the Farm Bill typically is written to fund farm programs over a five-year period. The last Farm Bill was passed in 2018, but Congress was unable to agree on reauthorization in 2023 and 2024, so the provisions of the 2018 bill were continued for two years. But while the dollar amounts in the 2018 bill remained the same, inflation pushed up prices of land, fuel, seed, fertilizer and labor. So, farmers who received benefits from the Farm Bill saw their buying power steadily reduced over the last two years.

The increased budget authorization in the new bill, along with several rule changes that will benefit farmers, should help the agriculture community catch up with the new economy.

Over the next few weeks and months, we will write in more detail about specific programs impacted by the new Farm Bill and how they may affect you.

In the meantime, if you have any questions or concerns about how the new Farm Bill, contact an Adams Brown agriculture advisor.