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WASHINGTON — Farmers who operate as LLCs, S-Corporations or similar business entities could qualify for larger USDA payments under new Farm Service Agency rules.
The changes will begin with the 2026 crop year and are designed to treat more farm business structures the same way partnerships and joint ventures are treated.
Farmers who operate under those business structures will need to update their farm operating plans with their local FSA office by Sept. 15, 2026, for the 2026 program year.
The change means each qualifying member of an LLC, S-Corp or similar farm business can help the farm qualify for payments, as long as that person is actively involved in the farming operation.
In the past, some farm businesses organized as LLCs or S-Corps were limited to one payment limit, no matter how many people were involved in the operation. Under the new rules, those entities will be treated more like partnerships, joint ventures and general partnerships.
Bill Beam, administrator of the Farm Service Agency, said the change should give farmers and ranchers more flexibility in how they organize their operations.
“The 2026 program year will be a monumental change for farmers and ranchers who can now structure their farm entities to benefit from the legal protections of certain business structures without limiting their access to the farm safety net,” Beam said.
The changes were included in the Working Families Tax Cuts Act, which made several updates to farm program eligibility, disaster assistance and price support programs.
USDA officials said farmers who have crop insurance or Noninsured Crop Disaster Assistance Program coverage should contact a crop insurance agent or local FSA office before making changes to their farm business structure. That will help make sure the timing of any changes does not affect current insurance coverage.
Farmers who are part of a qualifying business entity still must contribute to the operation and be actively involved in farming. The new rules also allow members of all entity types to be paid for labor and management work and still use that work to help meet the “actively engaged in farming” requirement.
The USDA is also increasing payment limits for the Agriculture Risk Coverage and Price Loss Coverage programs.
Starting with the 2025 crop year, the ARC and PLC payment limit will increase from $125,000 to $155,000. That limit will be adjusted each year for inflation.
Payment limits are the maximum amount a person or legal entity can receive through certain USDA programs during a crop year.
The new law also changes how USDA looks at farm income. The definition of farming income has been expanded to better reflect modern farms and ranches. It can now include income from agri-tourism, direct-to-consumer sales and certain equipment sales.
That change could help diversified farms meet USDA income rules.
Producers are exempt from the $900,000 adjusted gross income limit for conservation and disaster programs if at least 75 percent of their average gross income comes from farming, ranching or forestryrelated work.
Qualifying business entities will not have to meet the income test as a business. However, individual members of those entities must still meet USDA income rules.
Producers should contact their local FSA county office for more information or to update their farm operating plan before the Sept. 15, 2026, deadline.
