Courtesy of Plains Cotton Growers
The U.S. Department of Agriculture (USDA) Farm Service Agency ( FSA) hosted a town hall today, June 5, to discuss the upcoming changes to payment limitation and payment eligibility as mandated in the One Big Beautiful Bill Act that was signed into law on July 4, 2025.
Changes to Payment Limitation and Payment Eligibility: 1. Qualified Pass-Through Entities (QPEs) – Multiple Payment Limits (Program Year 2026+).
Previously ( 2025 and earlier):
All LLCs and corporations (and most partnerships) were treated as a single legal entity with one payment limitation, regardless of how many members they had.
Starting with 2026:
• Certain entities are now treated as qualified passthrough entities (QPEs):·
• Partnerships (as defined by the Internal Revenue Code)
• S corporations
• LLCs that do not elect to be taxed as a corporation
• Plus the joint ventures and general partnerships that were already treated this way
• These QPEs can now qualify for multiple payment limitations, determined by the number of members.
• Example: An LLC with 4 eligible individual members may qualify for up to 4 limits, instead of just 1 (if all members are eligible and actively engaged).-
Actively Engaged Requirement for QPEs:
• For a QPE to be fully actively engaged in farming, each member must:
• Provide a significant left-hand contribution: capital, equipment, or land, and
• Provide a significant right-hand contribution: active personal labor or active personal management.
• Contributions must be:
• Regular, documentable, and separate and distinct from other members.
• Commensurate with each member’s ownership share.
• At risk.
Key easing of a prior restriction:
• Members of all entity types may now receive compensation for their labor/ management contributions without that compensation automatically undermining whether their contributions are “significant and commensurate.”
• Previously, in joint ventures/general partnerships, “guaranteed payments” could force you to discount those contributions.
2. Higher ARC/ PLC Payment Limits with Annual Inflation Adjustment ( Program Year 2025+).
• For 2025, the ARC and PLC payment limitation increased from $125,000 to $155,000 (before inflation adjustment language is applied).
• The statute also requires an annual adjustment for inflation.
• Updated limits will be posted each year on the FSA public payment limitation website (with a chart at the bottom of the page).
3. Updated AGI Rules
& New Exception for Certain Programs
AGI baseline stays the same:
• The average AGI limit remains $900,000, with:
• Annual filing,
• Once- every- threeyears verification, and
• Continued ability for CPA/tax attorney to split spousal income.
For qualified passthrough entities:
• No entity-level average AGI certification anymore (mirrors joint operations):
• The LLC/partnership/S corp itself does not file AGI.
• All members still must meet the AGI requirements individually.
New AGI waiver exception:
• For certain disaster programs (ELAP, LFP, WIP, TAP, NAP) and Title II conservation payments received on or after October 1, 2024, there is a new exception:
• The $900,000 AGI cap can be waived if the producer certifies they receive at least 75% of gross income from farming, ranching, or silviculture (forestry).
• Certification is via CCC-943, updated for:
• New income-fromfarming definition; and,
• Allowing certification by enrolled agent, CPA, or tax attorney (CPA/tax attorney required when splitting spousal income).
4. Expanded Definition of “Income from Farming.”
The definition of income from farming, ranching, and silviculture now includes:
• Agritourism (using the National Ag Law Library definition, not state-by-state definitions),
• Sales and trades of agricultural equipment; and,
• Dropped the old 66.66% test for equipment sales/trades.
• Participants no longer need to pass that test before including income from equipment sales/ trades as “farm income.”
5. New/ Updated Forms and Reporting Requirements (Program Year 2026+).
Farm Operating Plan ( CCC- 902 / CCC- 902 EP):
• All corporations, LLCs, and other pass-through entities must file an updated CCC-902 (or manual CCC902 EP) for program year 2026 and forward to:
• Designate entity type (e.g., QPE vs. non-passthrough), and
• Report entity structure and member contributions.
• Ownership date rules:
• Historically: use June
• For 2026 only: changes made through September 15, 2026 will be honored for payment purposes.
• Changes reported after Sept 15, 2026 will require supporting documentation to show they actually occurred by that date.
• Signature requirements for QPEs (2026):
• For program year 2026, all members of a QPE must sign the updated farm operating plan, even if one member normally has signature authority.
• After a valid plan is on file, that plan will indicate who has ongoing signature authority; then those designees can sign future documents for the entity.
Automated vs manual process:
• FSA strongly recommends using the automated business file process in county offices:
• It only asks applicable questions based on the operation type.
• The new CCC-902 EP is a manual, more comprehensive form:
• Can be used by QPEs, legacy corporations, and LLCs, etc.
• Limited partnerships will gain access to automated business file software in early summer 2026, so they can also use the automated process.
If you have questions about how this informaion should be applied to you own operation, we encourage you to consult your legal councel and/or Certified Public Accountant.