Ag News
Final budget reconciliation bill gives certainty to farmers
Posted on Jul 09, 2025 at 11:58 AM
On July 3, the U.S. House of Representatives passed H.R. 1, commonly referred to as “One Big Beautiful Bill,” by a 218-214 vote. Major agricultural groups, including Farm Bureau, welcomed passage of the bill, which should benefit farmers. This followed the U.S. Senate passing the bill in a 51-50 vote July 1, with Vice President J.D. Vance casting the vote required to break the tie. President Donald Trump signed the bill into law July 4.
Georgia Republicans Rick Allen, Buddy Carter, Andrew Clyde, Mike Collins, Marjorie Taylor Greene, Brian Jack, Barry Loudermilk, Rich McCormick and Austin Scott voted in favor of the bill.
“Farm Bureau applauds the House and Senate for passing legislation that will bring certainty to America’s farmers and ranchers. Modernizing important farm safety net programs and making permanent critical tax provisions could be the difference between staying in business or shutting down the family farm,” said American Farm Bureau Federation President Zippy Duvall. “More than half of farmers are losing money, so an increase in reference prices is desperately needed, and tax tools will help farmers and ranchers plan for the next season and the next generation.”
The National Cotton Council (NCC) called the bill a “major win for Georgia cotton growers,” and noted that the 2018 farm bill, under which U.S. farmers are still operating, is too out-of-date to address cotton growers’ concerns. The NCC praised Congress for including $67 billion in additional farm bill funding that “will bring the cotton safety net more in line with current production costs.
The NCC and the United States Peanut Federation (USPF) both pointed to the bill’s adjustments to commodity reference prices as positive moves.
For cotton, the Price Loss Coverage (PLC) seed reference price is increased from 36.7 cents per pound to 42 cents per pound, effective with the 2025 crop. At 42 cents per pound reference price would have triggered payments under the PLC plan in 32 of the last 35 crop years. The bill calls for increases in payments limits under PLC and Agricultural Risk Coverage (ARC) to $155,000, indexed to inflation, and allows entities such as S-Corps and limited liability companies (LLCs) to be treated the same as general partnerships on how payment limits are structured.
The BBB also solves many of the problems arising from current enrollment restrictions applying to PLC, ARC, and the Stacked Income Protection Plan (STAX), which is a cotton-specific area-wide insurance program. Right now, cotton growers are ineligible to purchase STAX if they are enrolled in either PLC or ARC. The BBB provides producers with better safety net options by (1) enhancing the Supplemental Coverage Option (SCO) area-wide policy so that it functions more like STAX, and (2) continuing to allow growers to purchase SCO and enroll their seed cotton base acres in PLC.
The BBB also provides needed changes to the marketing loan program by increasing the cotton loan rate to $0.55 while modifying the Adjusted World Price (AWP) calculations in order to provide more opportunities for marketing loan gains or loss deficiency payments.
For peanuts, the bill increased reference price from $535 per ton to $630 per ton, also beginning with the 2025 crop year.
The bill provides an additional 30 million new base acres, beginning with the 2026 crop year and increases peanut marketing loan values from $355 per ton to $390 per ton, beginning with the 2026 crop year, while including a separate peanut payment limit set at $155,000 per entity.
The bill makes permanent provisions allowing 100% expensing and Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)-based interest deductibility.
Permanent 100% expensing allows companies to immediately deduct the full cost of equipment purchases, rather than spreading deductions over years. According to the Equipment Leasing & Finance Association (ELFA), this boosts capital investment, accelerates innovation, and drives productivity — especially in capital-intensive sectors that rely on financing.
Returning to the EBITDA-based interest deduction standard means businesses can deduct interest expenses based on earnings before depreciation and amortization — providing a more generous and accurate measure of financial capacity, especially for capital-intensive industries. This change helps ensure companies can continue to access the financing they need to invest, grow, and compete.
The National Cattlemen’s Beef Association (NCBA) emphasized other tax provisions expected to help farmers:
• The death tax exemption is increased to $15 million per individual or $30 million per couple;
• The Section 199A Small Business tax deduction is made permanent at 20%;
• The Section 179 deduction will allow farmers and ranchers to deduct up to $2.5 million in qualified equipment expenses;
• The bill permanently extends itemized deductions for personal casualty losses resulting from federally declared disasters. This is an extension of the Federal Disaster Tax Relief Act that was enacted in December 2024.
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