NASHVILLE, TN – Farm families operating through LLCs, S corporations, and other pass-through entities may need to review business structures quickly under USDA’s new payment-limit rule. Roger McEowen with Washburn University says the rule took effect June 2.
The final rule implements changes from the One Big Beautiful Bill Act for the 2026 program year. Qualified pass-through entities can now stack certain payment limits based on the number of owners actively engaged in farming.
That puts LLCs and S corporations closer to the treatment long available to general partnerships and joint ventures. The 2026 tentative ARC and PLC payment limit is $164,000 per qualifying active owner.
The rule also allows compensated labor and management to count toward actively engaged determinations. A separate 75 percent gross farm income test may waive the $900,000 adjusted gross income limit for certain disaster and conservation programs, but not ARC or PLC.
McEowen says September 15 is the key 2026 snapshot date for entity structure, ownership, and contributions. Producers should update operating plans early.
Farm-Level Takeaway: Producers using farm entities should review ownership, labor contributions, and FSA paperwork before September 15.