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The House Ways and Means Committee has advanced a comprehensive tax package, part of the broader reconciliation bill titled “The One, Big, Beautiful Bill.” This legislation aims to extend and expand upon the Tax Cuts and Jobs Act (TCJA) of 2017, with significant implications for farmers, ranchers, and small businesses.

The proposed tax package makes permanent several provisions from the TCJA that were previously set to expire. It also expands upon these provisions to provide additional opportunities. These changes provide greater tax certainty and potential savings for farmers, ranchers, and small businesses. 

“This is yet another example of seeing direct results of the time and efforts farmers do to carry on the advocacy work of Farm Bureau,” said Bill Patterson, president of Ohio Farm Bureau. “Conversations about these very policies were discussed during our County Presidents’ Trip to D.C. in March and again just recently as we traveled to Washington alongside our partners with Ohio State to visit with both of Ohio’s senators and many members of Congress representing the Buckeye State. We appreciate our lawmakers hearing our message, taking it to heart and straight to the halls of Congress, and we urge that these important provisions to Ohio Farm Bureau members continue through the process until they become law.”

Some of the key provisions in this proposed tax package affecting farmers, ranchers, and small businesses include:

Permanent extension of TCJA provisions

• Tax Rates and Brackets: The 2017 TCJA tax rates and brackets, including a lower top rate, would be made permanent, preventing many families from experiencing higher tax liabilities.
• Section 199A Deduction: The bill proposes to make permanent the deduction for qualified business income for pass-through entities and increase the maximum deduction from 20% to 23%. 
• Section 179 Expensing: The small business expense threshold is increased to $2.5 million, allowing immediate deduction of capital expenditures, benefiting equipment and infrastructure investments.
• Estate Tax Exemption: The estate tax exemption is permanently increased to $15 million per individual, indexed for inflation, reducing the tax burden on family-owned farms and ranches.
• Alternative Minimum Tax (AMT): The bill would make permanent the increased threshold for paying an AMT.

Accounting and interest deduction provisions

• Cash Accounting: The bill retains the ability for small businesses, including farms and ranches, to use cash accounting methods, simplifying tax compliance.

• Business Interest Deduction: The limitation on business interest expense deductions remains applicable only to businesses with average annual gross receipts exceeding $25 million, preserving full deductibility for smaller operations.

• Immediate Expensing: New manufacturing/production structures in America can take advantage of immediate expensing. This enhances cost recovery for new agricultural and farm investments in rural America.

Other relevant provisions

• Bonus Depreciation: The legislation reinstates 100% bonus depreciation for five years, enabling full expensing of qualified property in the year of purchase.

• Standard Deduction and Child Tax Credit: The standard deduction would increase by $2,000 for married couples, and the child tax credit is raised to $2,500 through 2028, providing additional relief to farming families. Both the $12,000 (individual filer) standard deductions and $2,000 child tax credit from TCJA are made permanent.

• Renewable Fuels: The 45Z clean fuel production credit is extended by four years, prohibiting foreign-owned entities from benefiting from the tax credit and limiting credits to feedstocks from the U.S., Mexico or Canada. Indirect land use effects from emission calculations are removed, and manures are added to scored feedstocks.

• Research and Development: The legislation temporarily restores immediate expensing for domestic research and development expenses from 2025 through 2029.

The individual reconciliation bills advanced by authorizing committees will be packaged together by the House Budget Committee before a full House vote, which is anticipated by Memorial Day. Ohio Farm Bureau and American Farm Bureau will continue to monitor the legislative process and engage with policymakers to advocate for provisions AFBF policy supports.