Yangxuan Liu, Associate Professor, University of Georgia; Michael R Langemeier, Professor, Purdue University
One Big Beautiful Bill Act (OBBBA) changes how U.S. Department of Agriculture (USDA) payment limitations apply to different farm business structures. On June 2, 2026, USDA released an implementation guideline explaining how this provision will be administered beginning with the 2026 program year. [Link to USDA Implementation Guideline]
Under previous USDA regulations, business structure affected the number of payment limitations an operation could receive. General partnerships and joint ventures were permitted to multiply the applicable payment limitation by the number of eligible partners. In contrast, a Limited Liability Company (LLC) or S corporation was generally treated as a single legal entity, regardless of the number of members actively engaged in the farming operation. Consequently, these entities (LLCs and S corporations) were generally eligible for only one payment limitation. As a result, many producers organized as general partnerships to preserve eligibility for multiple USDA payments, despite the additional personal liability associated with that business structure.
To address this imbalance, OBBBA established the Qualified Pass-Through (QPT) Entity classification (Table 1). Eligible QPT entities include Partnerships, Joint ventures, S corporations, and LLCs that are not taxed as C corporations. Beginning with the 2026 program year, QPT entities may qualify for USDA payment limitations based on the number of eligible members, provided each member satisfies USDA eligibility requirements, including the actively engaged in farming provisions. Now, Qualified Pass-Through LLCs and S corporations are treated similarly to general partnerships for USDA payment limitation purposes.
Table 1. Payment Limitations for Qualified Pass-Through (QPT) Entities Before and After the One Big Beautiful Bill Act (OBBBA).
| Business Structure | Before OBBBA | After OBBBA |
| General Partnership | Payment limitation multiplied by the number of eligible partners | No change |
| Joint Venture | Same as partnership | No change |
| S Corporation | One payment limitation per entity | Now treated like a partnership |
| LLCs that are not taxed as C corporations* | One payment limitation per entity | Now treated like a partnership |
*For C corporations and LLCs that elect to be taxed as C corporations, the payment limitation remains unchanged. These entities continue to be limited to one U.S. Department of Agriculture (USDA) payment limitation per entity.
The new QPT entity provisions have become effective for the 2026 program year. As a one-time exception, USDA will determine an operation’s business structure based on its organization status as of September 15, 2026. Beginning with the 2027 program year, the business structure determination date will revert to the standard June 1.
Example
Consider a family farming operation owned by four siblings, all of whom meet USDA’s eligibility requirements. Table 2 below summarizes the changes in payment limitations under different business structures for this family operation before and after OBBBA.
Under the 2026 payment limitation of $164,000 per eligible person for the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs, a family farm operating as a Qualified Pass-Through LLC or S corporation may increase its maximum USDA payment eligibility from $164,000 to $656,000, while retaining the liability protection offered by these business structures.
Table 2. Payment Limitation Changes for a Family Farming Operation with Four Siblings Before and After the One Big Beautiful Bill Act (OBBBA)
| Before OBBBA | After OBBBA | |
| General Partnership | Four payment limitations | Four payment limitations |
| Joint Venture | Four payment limitations | Four payment limitations |
| LLC* or S Corporation | One payment limitation | Four payment limitations |
*LLCs that are not taxed as C corporations.
Why Does This Matter?
The new rules have the potential to substantially increase total USDA program payments for eligible farms organized as Qualified Pass-Through LLCs or S corporations. USDA programs include Agriculture Risk Coverage (ARC), Price Loss Coverage (PLC), and certain USDA disaster assistance programs.
Perhaps more importantly, producers no longer must choose between maximizing USDA program benefits and obtaining the liability protection offered by an LLC or S corporation. Qualified Pass-Through (QPT) Entities give eligible operations greater flexibility to organize their business structures to meet liability protection, legal, tax, succession, and management objectives while maintaining eligibility for multiple payment limitations under USDA programs.
Disclaimer: This article is for educational and informational purposes only. Because every operation is unique, producers are encouraged to consult with their attorney, accountant, and crop insurance agent before making any changes.
Additional Information:
Federal Register. Payment Limitation and Payment Eligibility. Department of Agriculture, Commodity Credit Corporation, 7 CFR Part 1400, [Docket ID FSA-2026-0100], RIN 0560-AI86. June 2, 2026. https://www.federalregister.gov/documents/2026/06/02/2026-11002/payment-limitation-and-payment-eligibility (accessed July 23, 2026).
Kristine A. Tidgren. USDA Issues New Payment Limitation and Eligibility Rules. Center for Agricultural Law and Taxation. Iowa State University. June 4, 2026. https://www.calt.iastate.edu/post/usda-issues-new-payment-limitation-and-eligibility-rules (accessed July 23, 2026).
U.S. Department of Agriculture, Farm Service Agency. Payment Limitations. https://www.fsa.usda.gov/tools/informational/payment-eligibility/payment-limitations (accessed July 23, 2026).