The United States Department of Agriculture finalized new payment-limit rules on June 2 that will provide many farm operations organized as LLCs, S corporations, and other pass-through entities a clearer path to receiving farm program payments, beginning with the 2026 crop year.
Under the new guidance, each equal owner who is actively engaged in farming may qualify for a separate payment limit rather than having the entity treated as a single recipient. Farm CPA Paul Neiffer said, “We know under the old rules, if you’re an S corporation or an LLC, you were subject to one payment limit, whether you had five owners, one owner didn’t matter, you had one payment limit. Now we’re going to have payment limits based on the number of owners. If you have three owners, you’re going to have three payment limits.”
The change implements provisions in the One Big Beautiful Bill Act and updates long-standing Farm Service Agency rules that previously capped many entity-based operations at a single payment limit. USDA’s current materials indicate that Agriculture Risk Coverage and Price Loss Coverage payments are subject to a $155,000 annual limit starting in program year 2025.
Neiffer said the final rule is “long overdue,” and gave USDA high marks for how it carried out the policy change. He added that farmers have been advocating for this update for 15 to 20 years. The revised rules remove Adjusted Gross Income testing at the entity level; instead, each owner’s eligibility is determined individually based on active engagement in farming operations.
Members and owners can now be paid through salaries or guaranteed payments without jeopardizing eligibility under these new guidelines—a shift from previous regulations where such payments could reduce or eliminate benefits. Neiffer said, “If their income was over $900,000, they didn’t get any payment… Well this says just because general partnerships don’t have payment limits we’re going to extend that to S corporations and LLCs… We just drop down to the individual owners.”
Farmers must ensure their ownership information is updated with local FSA offices by September 15 so these changes can be applied. Neiffer said, “If you want to switch from a C corporation to an S corporation or if you want to switch from a general partnership over to an LLC… as long as that’s all done by Sept. 15th, you’ll be in time for the 2026 crops.” USDA estimates federal farm support will increase by about $50 million annually due to this rule change.
