New Budget Strengthens Farm Safety Net

By Scout Nelson

Farmers are closely examining the impacts of the new reconciliation budget, passed by Congress in July. The sweeping package carries both financial benefits and political debates that will shape rural communities.

Tax provisions are one of the biggest highlights. Farmers now have more flexibility with 100% bonus depreciation, meaning equipment purchases can be fully deducted the year they are placed in service.

The Section 179 expensing cap has been raised to $2.5 million, while a permanent 20% business income deduction helps farms keep more earnings. The estate tax exemption has doubled to $30 million per couple, protecting family farms. Farm income definitions now cover sales from equipment, agritourism, and direct-to-consumer sales.

Safety net programs also received the largest boost since 2002, with $66 billion added. The Price Loss Coverage (PLC) program now uses higher reference prices, adjusted with inflation. The Agriculture Risk Coverage (ARC) program guarantees 90% of revenue, up from 86%, and offers larger payment ranges. Payment limits increased to $155,000 per person, while 30 million new base acres are available.

Crop insurance has been expanded to give farmers more options. Beginning farmers now receive 10 years of premium support instead of 5, while subsidies increased for many plans. A pilot insurance program has been introduced for poultry producers. Livestock disaster aid was expanded to cover unborn animals, with 100% indemnity for predation and 75% for weather or disease losses.

Dairy producers benefit from higher Tier I coverage, and biofuels also gained support, with corn-based ethanol now eligible for aviation fuel production.

Despite these benefits, the bill includes trade-offs. Cuts to SNAP and Medicaid have sparked criticism from nutrition and farm groups. Some also believe the bill favors large commodity growers over smaller operations.

Overall, the budget brings significant opportunities for farmers, but its broader impacts on rural families and communities will continue to be debated.

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