The One Big Beautiful Bill (OBBB Act), signed into law on July 4, 2025, contains some of the most significant tax and agricultural provisions we’ve seen in years. Here’s a breakdown of the key points, with a focus on what they mean in practical terms for ranchers, farmers, and rodeo professionals.
1. Estate & Gift Tax Exemption — Protecting the Family Operation
The Act permanently increases the estate-and-gift tax exemption to $15 million per individual or $30 million per married couple (indexed for inflation beginning 2026).
For agricultural families, this means a much greater likelihood that the ranch, farmland, livestock, and operational assets can pass to the next generation without triggering a tax bill so large it forces liquidation. Careful estate planning will still be critical, but the higher thresholds offer meaningful breathing room.
2. Equipment & Asset Write-Offs — Section 179 and Bonus Depreciation
- Section 179: Deduct up to $2.5 million in qualified equipment in the year it’s placed in service, with a phase-out starting at $4 million (both indexed for inflation). This applies to tangible personal property used in your trade—tractors, combines, fencing, breeding equipment, corrals, irrigation systems, and most portable Ag structures.
- Bonus Depreciation: Permanently reinstates 100% first-year depreciation for “qualified property” placed in service after January 19, 2025.
Here, “property” means tangible assets with a recovery period of 20 years or less under IRS rules—not real estate or bare land. This can include:- Grain bins, silos, and feed storage structures
- Water wells
- Certain land improvements like drainage tile or leveled fields
- Livestock purchased for breeding
- Single-purpose Ag buildings (e.g., milking parlors, farrowing barns)
The goal is to encourage capital investment in the productive side of your operation—not buildings used for residential purposes.
3. Agricultural-Specific Tax Provisions
- Interest on Ag Loans: The law allows lenders—such as banks, Farm Credit institutions, or certain insurance companies—to exclude 25% of the interest income they earn from qualifying Ag loans from their own taxable income.
This does not generally apply to one farmer loaning money to another—it’s targeted at institutional lending. The intended benefit is indirect: lenders may pass on savings in the form of lower interest rates or more favorable terms for farm and ranch borrowers. - Installment Treatment for Farmland Sales: If you sell farmland to a qualified farmer (defined as someone who has farmed for at least 3 years), you may spread capital gains taxes over four equal annual installments, provided:
- The land has been in farm use or leased for farm use for at least 10 years before the sale.
- The buyer commits to using it for agricultural purposes for the next 10 years.
- AGI Threshold Exemption for USDA Programs: Many USDA conservation, disaster relief, and cost-share programs have an income eligibility cap—often $900,000 adjusted gross income.
Under the OBBB Act, if at least 75% of your average AGI over the prior 3 years comes from farming, ranching, or forestry, this cap is waived.
For example:
- A farmer with $1.2M AGI—$950K from crop and livestock sales, $250K from other sources—would normally be ineligible.
- Because 79% of their AGI is from Ag activities, they now qualify for these payments and benefits.
4. Broader Federal Tax Provisions
- 2017 Tax Rate Structure: Permanently extends current brackets and rates.
- Standard Deduction & Credits: Increases the standard deduction and enhances child tax credits through 2028.
- SALT Deduction: Raises the cap to $40,000 through 2029.
- Program Funding Changes: Cuts to Medicaid, SNAP, and certain energy programs may affect rural health access and community services.
CFO Perspective
- These changes open opportunities to upgrade equipment, expand infrastructure, and transfer operations to the next generation more efficiently.
- The AGI exemption expansion alone could make or break eligibility for disaster aid or conservation programs in high-income years.
- While direct lending exclusions won’t apply to most producers, they could still improve financing conditions.
- As always, precise planning is key—many of these benefits hinge on how income is classified and how purchases are structured.
Author: Mike DiSabatino is an Accountant, Tax Strategist, and CFO with 35 years of experience helping businesses and taxpayers across the country protect assets, minimize taxes, and drive growth. A former CPA and corporate CFO, Mike honed his instincts for quick thinking and precise execution on the racetrack—skills he now applies to crafting winning financial strategies. His track record blends high-speed decision-making with deep technical expertise, delivering results that keep his clients ahead in today’s fast-changing economic environment.
Pull ahead and accelerate your business growth!
The first step toward financial success is scheduling a consultation with our team. Bring your questions and concerns to our attention. Our engines are revved and ready to drive your business across the finish line as the champion of your industry!
Pull ahead and accelerate your business growth!
The first step toward financial success is scheduling a consultation with our team. Bring your questions and concerns to our attention. Our engines are revved and ready to drive your business across the finish line as the champion of your industry!
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