A Big Change for Family Farms and Partnerships
A new update under the One Big Beautiful Bill Act (OBBBA) has farmers everywhere asking, “Should I switch to an LLC?” This act changes how farm operations qualify for multiple payments under the Farm Bill, and it could make a big difference in how your business is structured.
Before OBBBA, only general partnerships or qualified joint ventures could receive more than one payment limit. That meant other entities like LLCs, S corporations, or regular corporations were limited to one payment of $125,000 total.
Let’s say Adam, Ben, and Charles started farming together. If they formed a general partnership, they could receive three separate limits, totaling $375,000. But if they formed an LLC instead, they were stuck with just $125,000.
Enter the “Qualified Pass-Through Entity”
The OBBBA introduced a new term: Qualified Pass-Through Entity. This new classification lets certain entities, including LLCs, qualify for multiple payment limits. Starting with the 2025 crop year, each limit increases to $155,000.
That’s a big deal for family farms and operations that want flexibility in how they’re structured. It means more options for how you set up ownership while still benefiting from those additional payments.
So, Should I Switch to an LLC?
The answer depends on your farm’s goals and structure. Switching to an LLC might make sense if you want the protection and flexibility it offers, especially now that multiple payments are possible. However, there are tax and management factors to consider before making the leap.
The new rules under the OBBBA have created exciting opportunities for farmers, but every operation is different. When you’re asking yourself, “Should I switch to an LLC?” remember it’s not just about what’s allowed. It’s about what makes sense for your long-term growth.
AgQuest Financial is here to help you understand your options, protect your operation, and plan for the future with confidence.