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How Would New Payment Limit Work Under House Farm Bill Proposal
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How Would New Payment Limit Work Under House Farm Bill Proposal

We review how the new payment limit may work for various types of farmers.

Paul Neiffer's avatar
Paul Neiffer
May 28, 2024
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Farm CPA Report
Farm CPA Report
How Would New Payment Limit Work Under House Farm Bill Proposal
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brown and white wooden barn on green grass field under blue sky during daytime
Photo by Leslie Cross on Unsplash

The House Farm Bill proposal has an option to increase the payment limit from the current $125,000 to $155,000 beginning with the 2025 crop year and then index it to inflation. However, in order to qualify for the increase, your adjusted gross income (AGI) from farming must be greater than 75% compared to total AGI.

The wording of the bill indicates that this test is applied to an individual or entity but does not include the new “qualified pass-through” entity. Therefore, the test for any entity taxed as a partnership or S corporation will be determined at the owner level to see if either the $125,000 or $155,000 limit will apply.

Let’s look at some examples (these are based on a three-year average):

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