If you farm through an LLC or an S corporation, USDA just handed you a bigger payment limit and a September deadline to lock it in.
On June 2, the Commodity Credit Corporation published its final rule writing the One Big Beautiful Bill Act’s payment-limit changes, effective the day it published. The headline: Starting with the 2026 program year, LLCs and S corporations are no longer stuck with one limit for the whole entity. They now get treated the way general partnerships and joint ventures always have, which is one limit for each owner who is actively engaged in farming.
The rule calls these qualified pass-through entities, which is any entity taxed as a partnership, S corporations, and LLCs that haven’t elected corporate treatment. A QPTE’s limit equals the program limit times the number of actively engaged owners. For a multi-owner family operation, that can multiply your cap several times over.
Two numbers matter. First, OBBBA raised the ARC/PLC limit and indexed it to inflation — roughly $160,000 for 2025 and a tentative $164,000 for 2026. Plan on those, not the $125,000 the rule’s own examples still use. Second, the stacking. A four-member family LLC that used to share a single $164,000 cap now reaches $656,000. On a farm with enough base to generate $700,000 in ARC/PLC, that’s nearly half a million dollars you stop leaving on the table.
A related fix: an owner’s salary or guaranteed payment now counts toward being actively engaged. Previously, a salaried daughter running the place was disregarded and the entity stayed at one limit. Now her paid management counts and a two-owner S Corp doubles to $328,000.
There’s also relief on the $900,000 income cap. Normally, average adjusted gross income over $900,000 shuts you out. OBBBA waives that cap for disaster and conservation programs and the NRCS conservation programs — if at least 75% of your average gross income comes from farming, ranching or silviculture. But note the cap is on adjusted gross income and the 75% test runs on gross income before expenses. An overwhelmingly agricultural operation usually clears 75% easily, even in a thin year. It does not reach ARC or PLC, though, because those stay capped.
Here’s the Catch
You must have your updated entity structure (if any) in place by Sept. 15. File an updated farm operating plan on FSA Form CCC-902E, certify your entity type and map your ownership so you know how many actively engaged owners you’re counting.
Make sure you do not file your certification with FSA until the new FSA Form CCC-902E is released. The current one is dated February 18, 2025, and is outdated.
Because a regular corporation still has one payment limit, you may need to consider switching to an S corporation if you are bumping up against the limits. This needs to be discussed with your tax adviser to see when the optimum time is for a conversion.