The One Big Beautiful Bill Act (“OBBBA”) has introduced changes that will now allow farmers to choose an entity structure other than the historically chosen general partnership. Family farms were previously limited in entity selection because “certain farm support programs—namely, the Price Loss Coverage and the Agricultural Risk Coverage [programs]—have [always] determined who can receive payments.”[2] The USDA’s Farm Service Agency (FSA) has rigid rules regarding entity attribution, and thus, limited liability corporations (LLCs), S corporations, and other similar structures were only eligible for a single payment, while general partners could receive multiple payments, one for each partner.[3] While these limits were meant to prevent corporate “paper farms” from abusing federal funds, they inadvertently led family farms to organize as general partnerships solely to maximize the number of payments available to the farm as a business entity.[4] As a result, family farms were essentially forced to adopt a general partnership structure to receive maximum support payments, despite the requisite exposure to personal liability.[5]

The OBBBA, enacted on July 4, 2025, sought to reconcile this disparity by including partnerships, S Corporations, LLCs, limited liability partnerships and joint ventures as “qualified pass-through entit[ies]” and “directing the USDA to treat such entities in the same manner as general partnerships for payment limitation purposes.”[6] Now, such entities are no longer confined to a single payment but are eligible for multiple payments.[7] The OBBBA also mandated an increase from $125,000 to $155,000 for the per-person payment limits which came into effect for the 2026 crop year.[8] Now, “[e]ach member of the qualified pass-through entity who meets actively engaged in farming criteria will help qualify the entity for expanded payments.”[9]

While the OBBBA allows for this kind of look-through attribution, it does not automatically grant payments to every producer on the farm; rather, each producer (“owner, operator, landlord, tenant, or sharecropper that shares in the risk of producing a crop and is entitled to a share of the crop that is produced on the farm”) has to meet the “actively engaged in farming” criteria these criteria.

Under the old rules, a farm structured as an LLC, composed of four family members, would be treated as a single entity and entitled to only one payment limit, regardless of the number of family members running the farm. For the farm to receive more than one payment limit, it would have to be structured as a general partnership and take on the liability risk involved. With the changes brought by the OBBBA, this same farm structured as an LLC, composed of four family members who all meet the “actively engaged in farming” criteria, would be able to combine four payment limits while retaining the liability protection an LLC provides.

This significant change brought by the OBBBA provides critical planning opportunities for family farms seeking to transition to an entity that provides limited liability while allowing these farms to maximize the number of payments they can receive under federal support programs. However, time is of the essence. For example, farmers aiming to be strategic and stack payment limits for the current 2026 crop year had to act quickly and file an updated farm operating plan under Form CCC-902E by September 15, 2026.[12] Navigating these structural transitions into the future will entail leveraging advantages of alternative entities and initiating these changes sooner rather than later.

[1] CCC Payment Limitation and Payment Eligibility, 7 C.F.R. § 1400.203 (2026); see also Thomas Rutledge & William Cartwright, Is Now the Time to Convert Your Farming Partnership to an LLC or S Corporation?, A.B.A.: Bus. Law Today (July 22, 2026), https://www.americanbar.org/groups/business_law/resources/business-law-today/2026-july/is-now-time-convert-your-farming-partnership-llc-s-corporation/.

[2] Rutledge & Cartwright, supra note 1.

[3] Id.

[4] Id.

[5] Id.

[6] Paul Neiffer, Agricultural Tax Provisions of the One Big Beautiful Bill Act: Implications for Minnesota Ag Clients, MNCPA: Footnote (May 27, 2026), https://www.mncpa.org/agricultural-tax-provisions-of-the-obbba/.

[7] Id.

[8] Id.

[9] USDA Expands Payment Limitation and Payment Eligibility Provisions for Farmers, USDA Farm Serv. Agency: News and Events: FSA News (June 3, 2026), https://www.fsa.usda.gov/news-events/news/06-03-2026/usda-expands-payment-limitation-payment-eligibility-provisions-farmers.

[10] Agricultural Act of 2014, Pub. L. No. 113-79, § 1111(14), 128 Stat. 649, 660 (2014); see also Randy Schnepf & Megan Stubbs, Cong. Rsch. Serv., R46248, U.S. Farm Programs: Eligibility and Payment Limits (2020).

[11] 7 C.F.R. § 1400.202; see also Cong. Rsch. Serv., R44656, USDA’s Actively Engaged in Farming (AEF) Requirement (2019).

[12] Keith A. Raynor, Every Farm Entity Must File a New Form 902E by Sept. 15, 2026, TRP Sumner: News (June 8, 2026), https://www.trpsumner.com/news/farm-entity-must-file-a-new-form-902e.

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