Farm bill changes may prompt restructuring across U.S. agriculture

The One Big Beautiful Bill, signed into law in July 2025, is poised to reshape the farm safety net in ways that extend beyond higher payments and expanded crop insurance coverage. Advisers say the legislation could push producers to reconsider how their operations are structured, with implications for taxes, government payments and succession planning.

Speaking at the 2026 Top Producer Summit, farm accountant Paul Neiffer said the measure alters long-standing rules governing farm programs and payment limits. While much of the early attention has focused on higher reference prices and stronger crop insurance subsidies, he said the structural changes embedded in the law may prove more consequential over time.

“This bill changes the rules we’ve all been operating under for the last 20 years,” Neiffer said. “When the rules change, the structure of the farm suddenly matters a lot more.”

The legislation arrives as farm finances tighten. The U.S. Department of Agriculture’s latest net farm income forecast shows a sharper-than-expected decline for 2025, with little improvement projected for 2026, particularly for row-crop producers. Income peaked in 2022 and has trended lower since, reflecting weaker commodity prices and narrower margins.

Government payments remain a key stabilizer. Without programs such as Agriculture Risk Coverage (ARC), Price Loss Coverage (PLC), Farm Service Agency payments and supplemental disaster assistance, many row-crop farmers would be under significantly greater financial strain, Neiffer said. Payments tied to the new law are expected to begin flowing in October, providing support as balance sheets tighten across much of farm country.

Crop insurance provisions draw praise

Neiffer characterized the bill’s crop insurance provisions as among its strongest elements. Premium subsidies for revenue protection policies increase by five percentage points for coverage levels between 55% and 75%, and by three percentage points for 80% and 85% coverage.

The Supplemental Coverage Option (SCO) now extends to 90% coverage, and producers may pair ARC with SCO, a combination previously barred. SCO subsidies rise to 80% from 65%, lowering out-of-pocket costs for higher levels of protection.

For wheat growers and other producers, the changes reduce premiums while expanding coverage options.

The measure also expands incentives for beginning farmers. Previously eligible for a 10% premium subsidy increase for five years, new entrants will now receive enhanced subsidies for up to 10 years, with larger benefits in the early years. Advisers say the change could affect how families transition operations to the next generation, as younger farmers may find it financially advantageous to operate independently in order to qualify.

Prevent plant concerns linger

Not all revisions have been welcomed. Changes to prevent plant coverage remain a concern in regions prone to excess moisture, including parts of Arkansas and the Dakotas.

Under earlier rules, producers could purchase an additional 10% of prevent plant coverage. That option was reduced to 5%, and the U.S. Department of Agriculture’s Risk Management Agency is considering further scaling it back. Producers in high-risk areas say the additional coverage can be critical in particularly wet years.

Even so, advisers broadly view the crop insurance package as strengthened under the new law.

ARC and PLC revisions provide multi-year support

Beyond insurance, the bill increases statutory and effective reference prices under ARC and PLC, raising the likelihood of payments during prolonged periods of weak commodity prices. Neiffer described the adjustments as an automatic cushion designed to smooth income over multiple years rather than a single marketing season.

The revisions are expected to provide ongoing support if prices remain below reference levels, reinforcing the safety net amid sustained margin pressure.

Payment limits may drive structural change

The most significant shift, advisers say, involves payment limits tied to business structure.

Under prior rules, many limited liability companies and S corporations were effectively capped at a single payment limit. The new law allows multiple payment limits based on the number of equal owners, depending on the organization of the operation.

That change could encourage general partnerships to convert to LLCs for liability protection and expanded payment eligibility. Some C corporations, which remain subject to a single payment cap, may consider converting to S corporations.

Several producers have already begun evaluating such changes, according to advisers. However, USDA has yet to issue detailed guidance on how the new payment limit rules will be implemented, creating uncertainty for those weighing restructuring decisions.

Until that guidance is released, advisers are urging caution, noting that adjustments to business entities can carry tax and legal consequences beyond farm program eligibility.

Tax incentives prompt caution

The legislation also includes expanded tax provisions, including continued bonus depreciation. While these measures may offer short-term advantages, advisers warn against allowing tax considerations alone to drive capital purchases or expansion plans.

Buying equipment primarily to secure a deduction, particularly when financed with debt, can create financial strain in subsequent years if margins remain tight, they said.

USDA guidance on payment limits was widely expected by the end of 2025 but has yet to be published. Once clarified, the rules could influence some of the most significant structural decisions farm operators have faced in years, driven as much by federal policy as by commodity markets.