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Editor's Note: The version of this column that appeared in the November 2025 print edition of Progressive Farmer magazine included a number of errors. Those have been corrected in this online version. DTN/Progressive Farmer apologizes for the mistakes.

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In my September column, I dove into the One Big Beautiful Bill Act (OBBBA). For the most part, OBBBA either extended or made fixes to the Tax Cuts and Jobs Act (TCJA) of 2017. Because I didn't get the chance to talk about all the provisions that might have an impact on farmers, I thought I'd go into a few more details this month.

OBBBA enacted Section 1062, which allows an election when selling farmland to a qualified farmer. The seller may elect to pay his or her taxes on the gain of the sale of the farmland in four equal installments. To be eligible for the election, the property must have been farmed by the seller or have been leased to a qualified farmer and farmed for 10 years prior to the sale. Next, the property being sold must be subject to a covenant or other legal restriction that prohibits/restricts the property of all other uses except for a farming activity for 10 years following the sale of the property. In addition, a copy of the covenant must be filed with the first tax return. As you probably figured, the 10-year restriction will be the most difficult part in getting the deferral of the gain.

If the seller doesn't follow the rules, recognition of gain can be accelerated. If the seller misses a tax payment associated with the deferral, the remainder becomes taxable in the year of default. Also, if the seller passes away (individual) or upon the sale of substantially all the assets or a liquidation (trust, estate or C corporation), the remainder of the deferral may become taxable.

The qualified business income (QBI) deduction under Section 199A was made permanent and simplified. The deduction remains at 20% of qualified business income for pass-through entities such as sole proprietorships, partnerships and S corporations. Like before, C corporations do not qualify. The income phase-in ranges for the wage and property limitations and the specified service trade or business (SSTB) exclusion were expanded. For married individuals filing jointly, the phase-in range increased from $100,000 to $150,000. And for other taxpayers, the range increased from $50,000 to $75,000.

The 2017 Tax Cuts and Jobs Act (TCJA) suspended personal exemptions and replaced them with a higher standard deduction. This was set to sunset at the end of 2025 whereby personal exemptions would have returned starting in 2026. However, the OBBBA permanently repealed personal exemptions.

The child tax credit was increased and made refundable under the OBBBA. The child tax credit was permanently increased to $2,200 with the refundable portion maximum amount of $1,700 per qualifying child for the 2025 tax year. Both amounts will be adjusted annually for inflation, beginning in 2026. The credit begins to phase out for higher-income households at $200,000 (single) and $400,000 (married filing jointly). One change that might impact families is that to qualify for the credit, the child must have a Social Security number (this is expected to affect up to 2 million children).

A new, temporary additional deduction was created for eligible taxpayers aged 65 and older. Eligible individuals can deduct an additional maximum of $6,000. A married couple filing jointly where both are 65 or older can claim up to $12,000 total. This new deduction is subject to phase-outs.

The enhanced premium tax credits were not extended, and starting in 2026, individuals will have to repay ALL excess advance premium tax credits. Congress is set to vote mid-December to extend enhanced credits. However, it is not clear if they might be extended as-is or if other conditions would be part of the final bill.

As I tell my clients, the OBBBA doesn't have any tax "home runs" but provides you with a series of "singles." By taking advantage of several of the OBBBA provisions, farmers can see a decent reduction in their taxes.

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DTN Tax Columnist Rod Mauszycki, J.D., MBT, is a tax principal with CLA (CliftonLarsonAllen) in Minneapolis, Minnesota. Read Rod's "Ask the Taxman" column at https://www.dtnpf.com/….

Rod Mauszycki can be reached at taxman@dtn.com

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