Great News on Equipment Gains
Any calculation of farm income on or after June 2, 2026 now includes equipment gains as farm income
Here is the bottom line: it is now official that for any SDRP payment determination made on or after June 2, 2026, gains on the sale of farm equipment automatically count as farm income when USDA runs the 75% average adjusted gross income (AGI) test. That is a big deal. For a lot of farmers, equipment gains were the one thing keeping them under 75% — and keeping them from doubling their payment limit. That trap is now gone.
A quick refresher on why 75% matters
SDRP (the Supplemental Disaster Relief Program) has a payment limit of $125,000 per year for regular crops. But if more than 75% of your average AGI is farm income, that limit doubles. Combined across the 2023 and 2024 program years, qualifying means $250,000 instead of $125,000 for regular crops.
So the 75% test is not a footnote. It is the difference between $125,000 and $250,000 of disaster money landing in your bank account.
The old 66.66% rule was the problem
Under the old payment-limitation rules, equipment gains did not automatically count as farm income. They only counted if at least 66.66% of your average AGI already came from farming, ranching, or forestry before you added the equipment gain in.
That is a nasty chicken-and-egg problem. If a big equipment gain pushed your off-farm math around, you could fall below the 66.66% gate, lose the equipment gain as farm income entirely, and then fall below 75% — losing the doubled limit. Farmers who sold a combine or traded up a line of equipment in the base years got caught by this all the time.
