New FSA AGI and Payment Eligibility Updates for Agricultural Entities

The USDA Farm Service Agency (FSA) has announced important updates to payment eligibility and adjusted gross income (AGI) requirements that will take effect beginning with the 2026 program year. These changes are intended to provide agricultural operations with greater flexibility in structuring their businesses while maintaining eligibility for USDA program payments.

One of the most significant changes affects pass-through entities such as LLCs, S corporations, partnerships, and joint ventures. Under the new rules, qualifying entities may have greater access to FSA program payment limits when multiple owners are actively involved in the farming operation.

What's Changing?

Beginning with the 2026 crop year, FSA will expand the way payment limitations are calculated for qualified pass-through entities.

Under previous regulations, entities such as LLCs and S corporations were often restricted to a single payment limitation, even when multiple owners played an active role in managing and operating the farm.

The updated rules allow qualifying entities to potentially increase their payment limitation based on the number of owners who meet FSA's "actively engaged in farming" requirements.

This change is intended to provide more equitable treatment among different business structures and reduce situations where a farm's legal structure unintentionally limited access to USDA program benefits.

What Is a Qualified Pass-Through Entity?

Qualified pass-through entities generally include:

Partnerships
S corporations
Limited liability companies (LLCs) that are not taxed as C corporations
Joint ventures
Joint operations
General partnerships
Similar pass-through business structures

It is important to note that C corporations and LLCs that elect to be taxed as C corporations are generally not eligible under these expanded payment limitation provisions.

What Does This Mean for Farm Operations?

For operations with multiple owners, the new rules may increase the amount of FSA program payments available to the business.

However, eligibility is not automatic. Operations must still satisfy all applicable requirements, including:

Ownership and attribution rules
Adjusted gross income (AGI) limitations
"Actively engaged in farming" requirements
Program-specific eligibility criteria

Because these requirements remain in place, agricultural businesses should review their ownership structure and participation arrangements to determine whether they may benefit from the updated provisions.

AGI Requirements Remain in Effect

Adjusted gross income continues to play a key role in determining eligibility for many FSA and NRCS programs.

To remain eligible for covered program payments, individuals and legal entities must certify compliance with applicable AGI requirements. For the 2026 program year, AGI calculations will generally be based on tax years:

2022
2023
2024

Participants will also continue to complete required annual certifications and consent forms, including Form CCC-941, which authorizes USDA to verify compliance with AGI regulations.

Important 2026 Deadline

Agricultural operations organized as LLCs, S corporations, partnerships, or other newly qualifying pass-through entities should be aware of a special one-time deadline.

Farm operating plans must be updated with FSA by September 15, 2026.

Following the 2026 program year, FSA is expected to return to its standard June 1 ownership determination date.

Steps Agricultural Businesses Should Take Now

To prepare for these changes, consider taking the following actions:

Confirm your tax classification and determine whether your business qualifies as a pass-through entity under FSA rules.
Review ownership percentages and each owner's level of participation in the operation.
Evaluate any direct or indirect ownership interests in other farming entities.
Update farm operating plans before the applicable FSA deadline.
Complete all required annual AGI certification and consent forms.
Consult with tax, legal, and business advisors before making structural changes.
Contact your local FSA office to discuss how the new rules apply to your specific operation.

Final Thoughts

The new FSA rules provide additional flexibility for farms operating through LLCs, partnerships, S corporations, and similar business structures. For multi-owner operations, these changes could expand payment limitations and improve access to USDA program benefits.

Reviewing your operation's structure now can help your business to take full advantage of these opportunities beginning in the 2026 program year. For additional information and the most current guidance regarding FSA payment eligibility, payment limitations, AGI requirements, and actively engaged in farming provisions, producers are encouraged to visit the USDA Farm Service Agency’s Payment Eligibility page.

The information provided in this article is for general informational purposes only and should not be considered accounting, tax, legal, financial, or other professional advice. While every effort has been made to ensure accuracy, the information may not apply to your specific circumstances. Before making any business, tax, or financial decisions, consult with a qualified professional advisor.

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