The One Big Beautiful Bill Act (OBBBA) was signed into law by President Donald Trump on July 4 and includes provisions for the agriculture industry and livestock producers.
The American Farm Bureau Federation (AFBF) reviewed the budget reconciliation bill in a Market Intel report and outlined how ranchers and farmers will be supported. The organization said the legislative package preserves provisions supported by AFBF, strengthens the farm safety net and offers longer-term certainty for farmers and ranchers dealing with rising input costs, volatile markets and weather uncertainty.
“Modernizing important farm safety net programs and making permanent critical tax provisions could be the difference between staying in business or shutting down the family farm,” said Zippy Duvall, AFBF president, upon hearing of the bill’s passage.
The Congressional Budget Office estimates the OBBBA will increase agriculture-focused spending by $65.6 billion over the next decade. Of that total, $59 billion is directed toward core farm safety net enhancements. Out of the $59 billion, crop insurance accounts for $5.98 billion, disaster aid programs for $2.8 billion, trade promotion for $2.2 billion and $1.6 billion each for agricultural research and miscellaneous programs and targeted investments in horticulture, energy and rural infrastructure.
Bill provisions
The bill boosts disaster assistance programs by improving payment levels and eligibility criteria. The Livestock Indemnity Program was revised to provide 100% of market value for animals lost to predation and 75% compensation for animals lost to adverse weather or disease. The bill also creates a new payment mechanism for unborn livestock losses occurring after Jan. 1, 2024.
The OBBBA also expanded the Livestock Forage Disaster Program, providing one month of assistance after four consecutive weeks of qualifying conditions, as opposed to the previous eight weeks. A second month of assistance is authorized if drought extends to seven of the previous eight weeks.
The bill authorizes $233 million per year to USDA on animal disease prevention and response, a seven-fold increase from previous levels. It also funds the Sheep Production and Marketing Grant Program through 2026 to support innovation and marketing efforts in the industry.
The OBBBA includes several tax provisions that will benefit farm and ranch families. The bill makes individual tax cuts from the 2017 Tax Cuts and Jobs Act permanent for farmers and ranchers, including expanded tax brackets with a lower maximum tax rate, increased standard deductions of $15,750, child tax credits of $2,200 and increased alternative minimum tax thresholds.
The bill also extends the 20% deduction for pass-through entities, with a minimum deduction of $400 for small businesses earning over $1,000, easing tax burdens on family operations. In addition, the estate tax exemption was made permanent at $15 million per individual.
The OBBBA raises Section 179 small business expensing limits to $2.5 million, with a higher phase-out threshold of $4 million. In addition, the bill restores full bonus depreciation for capital investments. AFBF said this means farmers and ranchers can continue to write off the entire cost of new equipment and other essential capital upgrades in the year of purchase, rather than deprecating them over many years.
The budget package includes a broad reauthorization of the farm bill’s nondiscretionary spending provisions, updating and funding core agriculture titles through 2031.
The bill extends commodity support programs, which includes marketing assistance loans, Agriculture Risk Coverage, Price Loss Coverage and Dairy Margin Coverage.
The bill modernizes how farm entities are treated under USDA program rules, AFBF said. Pass-through entities like partnerships, LLCs and S corporations are treated equitably when it comes to payment eligibility and attribution. The annual commodity payment limit was increased from $125,000 to $155,000 and will account for inflation in the future. In addition, those who earn at least 75% of their income from farming, ranching or related activities like agritourism could be exempt from income-based eligibility limits.
“These changes recognize the diverse structure of modern farm operations and help ensure that program support reaches actively engaged producers,” AFBF said.
The OBBBA continues long-term funding for USDA’s major conservation programs through 2031, including Environmental Quality Incentives Program (EQIP), Conservation Stewardship Program (CSP) and Agricultural Conservation Easement Program (ACEP). While the levels exceed those provided under the 2018 Farm Bill, AFBF said, they reflect the redirection of Inflation Reduction Act (IRA) funding into the permanent farm bill baseline rather than new program expansions.
“Although this shift reinforces long-term baseline investments in working lands conservation, the bill does not retain all IRA-funded initiatives,” AFBF noted. The Congressional Budget Office estimates rescinded funds result in a net reduction of $1.8 billion in conservation spending over the next decade.
The budget reconciliation bill establishes a new Agricultural Trade Promotion and Facilitation Program beginning in 2027, which will provide $285 million in permanent mandatory funding each year. The bill also maintains support for key USDA research initiatives and provides funding to advance innovation. This includes $175 million for specialty crops research, $125 million annually for research facility upgrades, and expanded support for historically Black land-grant universities and farmers with disabilities.
Though AFBF applauded the bill’s passage, the group noted it is not a complete substitute for a complete farm bill reauthorization. “The bill was shaped by budget and jurisdictional limits that excluded several important areas of farm and rural policy,” AFBF concluded. — Anna Miller Fortozo, WLJ managing editor
