$6 Billion in Premium Support Included in Massive Tax Bill

Federal crop insurance programs will see increased premium subsidies for participating farmers, as well as special enhancements for first-time farmers, under the agricultural provisions of the recently enacted tax bill known as One Big Beautiful Bill (OBBB). These enhancements are aimed at making multiple crop insurance programs administered by the USDA more affordable and accessible.

Total new spending for farm support programs provided by the OBBB amounts to $66 billion, of which approximately 10% — $6 billion — is designated for crop insurance subsidies.

Most notably, the legislation includes the following:

  • Increased premium subsidies — The law increases crop insurance subsidies by 5% for farm owners who buy insurance to cover 70% to 75% of their revenue; and by 3% for farm owners who buy coverage at 80% or higher coverage level.
  • Expanded coverage options — The Supplemental Coverage Option (SCO) premium support was increased from 65% to 80%, creating a major incentive to add SCO coverage to a farmer’s total crop insurance program. Additionally, the accessibility of SCO coverage was expanded to enable farmers who elect either the Price Loss Coverage (PLC) or Agricultural Risk Coverage (ARC) programs to buy SCO. Previously, only farmers who elected to participate in the PLC program were eligible for the SCO option.
  • Longer-term benefits for new farmers — Programs to benefit first-time farmers, including crop insurance subsidies, have been extended to 10 years. These programs previously covered the first five years of farming.

Because the OBBB law was enacted relatively late in the year on July 4, 2025, the effective dates of these changes are as yet unclear, but will likely start in 2026 with wheat farmers the first to benefit from the new subsidies.

Impact of Increased Crop Insurance Subsidies

These new subsidies are the most significant enhancements of crop insurance in many years. Crop insurance subsidies typically are revised every five years when Congress reauthorizes the federal Farm Bill. The last major Farm Bill was enacted in 2018; however, partisan differences in Congress have stalled passage of a new Farm Bill since then. Farmers have been left to work with 2018-level crop insurance subsidies, reference prices and other economic provisions of the 2018 bill as Congress renewed it through continuing resolutions, despite significant increases in farming costs.

This year, many economic provisions normally included in the Farm Bill were broken out and incorporated into the massive OBBB tax bill.

The new subsidies will also enable farmers to more easily recover losses due to weather damage or market-related drops in commodity prices. This is particularly true for farmers who elect to participate in the SCO program, which adds an optional second layer of crop insurance that partially covers losses over and above what their basic crop insurance covers. Although remember, SCO pays out much more like the ARC program versus individual crop insurance. SCO only pays out if county average yields are below normal.

Additional changes impacting farmers in the OBBB law include:

  • Enhanced Coverage Option (ECO) and similar programs, including Margin Coverage Option (MCO), Hurricane Insurance Protection Wind Index (HIP-WI), and Fire Insurance Protection Smoke Index (FIP-SI), will also receive the increased 80% in premium support, making comprehensive coverage more affordable.
  • SCO coverage will also expand to a coverage level of 90% (from 86%).

Enhanced Benefits for Beginning Farmers and Ranchers

Beginning farmers and ranchers have received enhanced federal support for many years within the first five years of becoming a farmer. The OBBB law expands that support to 10 years and includes increased premium support for crop insurance.

The enhanced crop insurance benefits for beginning farmers include:

  • 15 percentage points additional subsidy for the first two crop years
  • 13 percentage points for the third crop year
  • 11 percentage points for the fourth crop year
  • 10 percentage points for years five through ten

Additionally, farmers within their first 10 years of operation also receive existing support such as waivers of administrative fees and base premium subsidies.

Questions?

The implementation dates of some of these subsidies, as well as other farm-related provisions of the OBBB law, have not yet been announced. However, the USDA has stated its commitment to “rapid implementation.”

If you would like to discuss how the new crop insurance subsidies and program expansions will affect your farm operation, contact an Adams Brown advisor.