Top 2025 Ag Stories: No. 3    12/29 04:53

   How the One Big Beautiful Bill Redefined Taxes and Farm Policy in 2025

   No. 3 on DTN's list of the Top 10 Ag Stories of the Year focuses on how much 
of an impact the One Big Beautiful Bill had on farm and family taxes, as well 
as how it influenced farm policy.

Chris Clayton
DTN Ag Policy Editor

   Editor's Note: Each year, DTN publishes our choices for the Top 10 ag new 
stories of the year -- issues and events -- as selected by DTN analysts, 
editors and reporters. This year, we're counting them down from Dec. 18 to Dec. 
31. On Jan. 1 and Jan. 2, we will look at some of the runners-up for this year. 
Today, we continue the countdown with No. 3: What was the impact of One Big 
Beautiful Bill and how it -- along with the government shutdown -- affected 
farmers and farm policy.

   **

   OMAHA (DTN) -- What began as a line from incoming President Donald Trump 
became the defining domestic policy law of 2025.

   Trump wanted "one big, beautiful bill" to pass his agenda for tax cuts, mass 
deportations and energy policies. The One Big Beautiful Bill Act became just 
that -- a sweeping budget reconciliation package that Trump wanted on his desk 
before Independence Day.

   After failing to get a farm bill done in the two prior years, Congress also 
added an expansion of the farmer safety net in the One Big Beautiful Bill Act, 
often called OBBBA or OB3 for short. The budget reconciliation package 
ultimately added as much as $61.8 billion in spending on farm programs over 10 
years.

   The legislation set up a monumental battle over how the $4.5 trillion in tax 
cuts would be partially offset by roughly $1.2 trillion in spending cuts. The 
Congressional Budget Office projects the OBBBA will increase the national debt 
by $2.8 trillion over 10 years.

   Passing the OBBBA was a high mark of the year for President Trump. He held a 
rally on July 3 at the Iowa State Fairgrounds to celebrate its passage. He 
signed the OBBBA on Independence Day at the White House.

   "With this bill, every major promise I made to the people of Iowa in 2024 
became a promise kept," he said at the rally.

   Trump added, "Very simply, the One Big Beautiful Bill will deliver the 
strongest border on Earth, the strongest economy on Earth, the strongest 
military on Earth, and ensure the United States of America will remain the 
strongest country anywhere."

   FARMERS BENEFIT

   Farmers were among the winners in the legislation. When the bill passed, 
Sen. John Hoeven, R-N.D., said on social media that Congress effectively passed 
a seven-year farm bill.

   "That includes priorities like updating reference prices for this crop year, 
stronger and more affordable crop insurance, as well as updates to the sugar 
program and improvements to livestock disaster programs. These are the core 
pieces of the farm bill and vital to farm country," Hoeven stated on X.

   OBBBA raised reference prices under the Prices Loss Coverage program (PLC) 
and the Agricultural Risk Coverage (ARC) program. For the 2025-26 crop year, 
USDA will provide producers with the higher of the calculated ARC or PLC 
payment rates after the marketing year ends. ARC/PLC payments next fall are 
projected at $13.5 billion.

   Addressing a long-time challenge with base acres, the legislation allows 
USDA to add up to 30 million new base acres tied to planting history from 
2019-23. USDA will have to come up with a prorated formula for determining 
eligible acres that will be added to the commodity program. However, the law 
does not allow producers to reallocate their current base acres.

   In addition, Congress made several changes to crop insurance, including 
expanding the Supplemental Coverage Option (SCO) to 90% coverage at the county 
level while boosting the federal subsidy to 80% of premium costs.

   TAX CUTS IN PACKAGE

   Among the tax law changes that will affect farmers:

   -- A 20% deduction for qualified business income is made permanent, which 
includes a minimum $400 deduction for businesses with at least $1,000 in income.

   -- Updated and expanded 100% bonus depreciation for equipment purchases is 
made permanent.

   -- For smaller businesses, OBBBA also increases the Section 179 deduction to 
$2.5 million for any business buying $4 million or less in equipment.

   -- The estate-tax exemption is made permanent and increased to $15 million 
for individuals and $30 million for married couples starting in 2026.

   -- Full expensing for research and development for farmers or businesses 
using innovative practices in their operations.

   -- A new 100% depreciation allowance for nonresidential property, which will 
include manufacturing facilities built before 2031. That provision includes 
language implying the bonus depreciation can be applied for buildings used for 
agricultural and chemical production.

   -- Any capital gains resulting from the sale of farmland to qualified 
farmers can be paid in four annual installments rather than all at once. Such 
farmland must have been in agricultural production for the past 10 years to 
qualify and remain in agriculture for another 10 years after the sale occurs.

   -- Rural bankers also will receive a 25% deduction on interest income from 
qualified rural real-estate loans.

   -- For biofuels, the 45Z Clean Fuels Production Credit is extended and 
modified. The law extended the 45Z tax credit to the end of 2029 but also cuts 
the top rate for 45Z from $1.75 a gallon to $1 a gallon. Transportation fuels 
developed from animal manure would also qualify for the credit.

   -- The Small Agri-Biodiesel Producer Credit doubled from 10 cents a gallon 
to 20 cents a gallon.

   -- A $10,000 deduction on auto loan interest for couples earning $200,000 or 
less.

   -- The state and local tax (SALT) deduction increases to $40,000 for 
taxpayers earning under $500,000.

   SNAP-MEDICAID CUTS

   The OBBBA also cut $185 billion from the Supplemental Nutrition Assistance 
Program (SNAP) over 10 years, a program that spends about $123 billion a year 
for roughly 42 million people on the program. The law increased SNAP work 
requirements while pressing on states to reduce SNAP error rates. The law, 
though, also temporarily shields states with the highest payment error rates 
before having to pay a share of SNAP costs. Still, most states will now have to 
pay a percentage of SNAP benefits starting in 2028, which could cause further 
cuts to benefits.

   Groups such as leaders of food banks said the SNAP cuts would put more 
pressure on charitable services when demand for food aid is already high.

   "In effect, we cut spending on SNAP to double subsidies to farmers," said 
Jonathan Coppess, associate professor of farm policy at the University of 
Illinois, during an event in Iowa earlier this month.

   Coppess added, "This is the end of the farm bill as we've known it. For 50 
years, the core deal has been food assistance paired with farm programs. That 
deal is now broken. OB3 is the fatal, final blow."

   The legislation also didn't extend the premium tax credits for the 
Affordable Care Act. That led to gridlock in Congress that eventually caused 
the longest government shutdown in history. Still, Congress could not come to 
terms on a health-care bill to extend the tax credits, which affect health 
insurance costs for roughly 24 million Americans.

   SNAP cuts also became part of the shutdown fight as the Trump administration 
effectively used SNAP benefits as leverage, which put pressure on Democrats to 
end the shutdown. SNAP benefits for 42 million Americans weren't paid 
throughout most of November as a result.

   OBBBA REBRAND

   The "One Big Beautiful Bill Act" became unpopular enough among some voters 
during the summer that the White House and Republicans in Congress in September 
sought to rebrand the legislation as the "Working Families Tax Cut Act." 

   Tax refunds for average Americans will be larger because of the OBBBA, 
according to an analysis from the Tax Foundation earlier this month. The law 
lowers individual income taxes by an estimated $144 billion.

   The act does allow certain service workers to deduct up to $25,500 in tips 
and workers can deduct up to $12,500 in overtime pay as well. Seniors over age 
65 also get a $6,000 bump in their standard deduction.

   The SALT cap increase, the deduction for seniors, the overtime deduction and 
an increase in the standard deduction are the biggest impacts most average 
families will see. Average tax refunds will increase about $800, the Tax 
Foundation stated.

   Still, the legislation is weighted more heavily toward top earners and 
corporations compared to middle-income families while lower-income people see 
limited tax benefits as they face potential SNAP and Medicaid cuts.

   **

   See more stories in DTN's Top 10 Ag Stories of 2025 countdown:

   -- Editors' Notebook, "Counting Down Top Ag Stories of 2025," 
https://www.dtnpf.com/agriculture/web/ag/news/business-inputs/article/2025/12/17
/counting-top-ag-stories-2025;

   -- Top 10 Ag Stories of 2025: No. 10, "From RFS Exemptions to E15 in CA, 
Biofuels Policy Makes News in 2025," 
https://www.dtnpf.com/agriculture/web/ag/news/business-inputs/article/2025/12/18
/rfs-exemptions-e15-ca-biofuels-makes;

   -- Top 10 Ag Stories of 2025: No. 9, "Glyphosate Faces Uncertain Future as 
Lawsuits Mount and Science is Questioned," 
https://www.dtnpf.com/agriculture/web/ag/crops/article/2025/12/19/glyphosate-fac
es-uncertain-future;

   -- Top 10 Ag Stories of 2025: No. 8, "NWS Causes Threat to US Livestock 
Industry," 
https://www.dtnpf.com/agriculture/web/ag/news/article/2025/12/22/nws-causes-thre
at-us-livestock;

   -- Top 10 Ag Stories of 2025: No. 7, "A Year of Scorched Earth at USDA With 
Mass Firings, Canceled Grants and Reorganization," 
https://www.dtnpf.com/agriculture/web/ag/news/article/2025/12/23/year-scorched-e
arth-usda-mass-grants ;

   -- Top 10 Ag Stories of 2025: No. 6, "Financial Losses, Labor Fears Tested 
America's Farmers in 2025," 
https://www.dtnpf.com/agriculture/web/ag/news/business-inputs/article/2025/12/24
/financial-losses-labor-fears-tested.

   -- Top 10 Ag Stories of 2025: No. 5, "Cattle Industry Experiences Historical 
Prices, Herd Numbers and Volatility," 
https://www.dtnpf.com/agriculture/web/ag/news/article/2025/12/25/cattle-industry
-experiences-prices

   -- Top 10 Ag Stories of 2025: No. 4, "Active Weather Largely Characterizes 
the 2025 Growing Season," 
https://www.dtnpf.com/agriculture/web/ag/news/business-inputs/article/2025/12/26
/active-weather-largely-characterizes

   Chris Clayton can be reached at Chris.Clayton@dtn.com

   Follow him on social platform X @ChrisClaytonDTN




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