The expiration of key provisions in the 2017 Tax Cuts and Jobs Act (TCJA) on December 31, 2025, presents a significant challenge for Congress and a looming threat to the agricultural sector. While the TCJA's corporate tax cuts were made permanent, most provisions benefiting individuals and small businesses, especially farm families, are temporary and set to end, triggering sharp tax increases beginning in 2026.
Many farmers and ranchers are already facing tight margins, and congressional action or inaction on tax policy could tip the balance between survival and failure. After the TCJA passed, around 65% of Americans, including farm families of all sizes, saw reduced federal tax burdens. If allowed to expire, the USDA estimates producers will face an additional $9 billion in federal taxes each year.
Federal tax hikes come at a time of record-high property taxes and ongoing economic pressure from low crop prices and above-average production expenses. On average, farms will pay $5,000 more in income tax annually. For moderate-sized farms, where average profits are below $45,000 even in good years, that means over 13% of earnings would be wiped out, putting capital investment and operational stability at risk.
The impact will be felt across all farm sizes. Larger family farms, which depend heavily on capital assets, would be hit hard by the loss of bonus depreciation and estate tax relief. Despite their scale, these farms are also dealing with narrow margins and are responsible for a major share of the nation's food production.
The consequences extend far beyond individual farm businesses. According to EY estimates, the expiration of TCJA provisions would lead to the loss of 49,000 jobs in agriculture, $3 billion in lost wages, and a $10 billion reduction in overall economic activity. These disruptions would ripple through rural economies, affecting feed stores, grain elevators, equipment suppliers, and other essential services in the agricultural supply chain.
While Section 179 capital expensing is one of the few provisions not set to expire, the vast majority of tax measures critical to agricultural producers will revert to outdated laws unless Congress acts. Farming is already subject to unpredictable risks, from weather to markets. Lawmakers have the opportunity to reduce uncertainty by providing tax stability. Making key provisions of the TCJA permanent could offer much-needed relief and support for the 2% of Americans working to provide food, fiber, and fuel to the nation and the world.
For more information:
American Farm Bureau Federation
Tel: +1 202 406 3600
Email: [email protected]
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