On June 2, 2026, the USDA’s Commodity Credit Corporation issued guidance implementing the payment limitation and payment eligibility provisions in the One Big Beautiful Bill Act, H.R. 1 (Pub. L. 119-21). The updated rule (7 CFR Part 1400) answers several outstanding questions and firms up the implementation time frame.
The guidance confirms that all qualified pass-through entities (QPTEs), including partnerships, joint ventures, S corporations and LLCs not taxed as C corporations, will be treated consistently for payment limitations and adjusted gross income limitations purposes, beginning with the 2026 crop year.*
For 2026, USDA will determine entity type based on an operation’s structure as of September 15, 2026. Beginning in 2027, the applicable date will be June 1. The rule also confirms that operations may organize as LLCs or an S corporations for legal or tax purposes without affecting eligibility for farm program payments, simplifying entity structure decisions. Entities in place and certified by September 15, 2026, will be recognized for 2026 program year payments.
What This Means for Operators
As operators consider entity structure changes in response to these updates, including restructuring LLCs or general partnerships, it is important to note that Farm Credit Mid-America loan documents require lender approval before borrower structure changes can be made. Customers should consult their financial officer before proceeding, as a waiver and loan document amendments may be required.
Farm Credit Mid-America financial officers can work alongside customers and their legal and tax teams as they evaluate options.
Find a detailed overview of the USDA-CCC changes, along with supporting documentation and examples, on the Iowa State University website.
*This information is not legal advice. Farm Credit Mid-America does not provide legal advice to its customers. If you have questions about the changes to this program and how they may impact your business, we encourage you to reach out to your legal counsel for advice.
