New law includes potential tax, financial benefits for farmers and ranchers

On July 4, 2025, major legislation brought sweeping reforms to tax and agricultural policies, creating new financial opportunities for farmers and ranchers. These reforms include valuable tax benefits designed to support the agricultural community. However, adapting to these changes will require careful planning, including revisiting risk management strategies and updating insurance policies. Making informed decisions will be key to maximizing the advantages offered by these new policies.

Important tax changes for farmers and ranchers

Key tax law changes relevant to farmers and ranchers include:

• Enhanced tax benefits
  • Bonus depreciation. Farmers can now permanently deduct 100% for purchases after January 18, 2025, of the cost of qualified assets in the year of purchase. This includes big-ticket buys like tractors and grain bins. Full deductions in year-one can allow for quick reinvestment in farms, ranches and ag businesses.
  • Section 179 The increased deduction limit of $2.5 million gives businesses a big tax break if investing up to $4 million in equipment or machinery. On top of tax savings, it will enable quicker adoption of new farm machinery technology.
  • Qualified business income deductions. A deduction of up to 20% for pass-through business income reduces the tax burden on family-owned farms and ranches. This also allows farmers to reinvest in their ag businesses.
• Estate planning and significant asset transactions
  • Permanent estate and gifting exemptions. Families can now transfer up to $15 million in assets ($30 million for a married couple) tax-free beginning in 2026, simplifying succession planning.
  • Flexible capital gains payments. Farmers selling land to qualified buyers can stretch capital gains taxes over four annual installments, easing financial pressures associated with large transactions.
• Farm program adjustments:
  • Revised definition of a beginning farmer or rancher, with relevant benefit availability extended to 10 years, enabling more producers to qualify under federal crop insurance programs.
  • Increased livestock indemnity payments at 100% of market value for losses from predation and 75% of losses from disease or adverse weather.
  • Increased reference prices for Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC).
  • Pass through entities like S-Corporations and LLCs taxed as partnerships, will now be treated like general partnerships under the payment limitation rules.
  • Increased crop insurance premium support percentages.
  • One-time opportunity to add base acres beginning in 2026.
  • Increased payment limits for commodity program payments to $155,000 adjusted for inflation.

Why these changes affect your farm property risk management and insurance coverage

Many of the changes directly affect risk management and insurance needs, particularly in areas like:

• Operational changes. The ability to upgrade equipment or diversify crops creates new risks for which existing insurance may not suffice.
• Policy adjustments. Taking advantage of tax savings through asset purchases or expansions often requires a reassessment of property values and coverage limits.
• Knowledge gaps. The comprehensive nature of this bill can overwhelm farmers and ranchers, leaving them unsure of how to maximize new opportunities while safeguarding their livelihood.

Enlist your expert farm team to maximize new tax incentives

Recent tax law changes are providing farmers, ranchers and agricultural business owners with enhanced benefits and long-term financial incentives. But every opportunity comes with its challenges. Now is the time to assess your operations through the lens of risk management and insurance to ensure you’re not only compliant but fully protected.

For your convenience, we’ve included a snapshot of some of the key changes affecting individuals, families, businesses and agriculture from the legislation.

This is not a complete list of OBBB changes. The information above is sourced from https://www.congress.gov/bill/119th-congress/house-bill/1/text. Further explanations and regulations may be needed to clarify some sections. Consult legal and tax experts to discuss your specific situation.