Tax
The Ohio General Assembly wrapped up its legislative session for the year last week, with much of the late-session energy given to property tax relief. The legislature focused on strategies for reducing Ohio property taxes in five bills it just sent to the Governor (see our earlier post). None of the bills addressed farmland taxation, however. But a bill the legislature might consider when it returns in 2026 does propose changes to Ohio’s Current Agricultural Use Valuation (CAUV) Program for farmland property taxes. H.B. 575, introduced by Rep. David Thomas (R-Jefferson) and Bob Peterson (R-Sabina) proposes a number of revisions to the CAUV program.
H.B. 575 doesn’t propose reductions to CAUV taxes, however. Instead, the bill contains changes to how the CAUV program works. The bill is consistent with plans in Ohio’s House for continuing to address property taxes. Rep. Bill Roemer (R-Richfield), chair of the House Ways and Means Committee where H.B. 575 now sits, stated that the five recently passed bills represented most of the “big structural changes” to property taxation and that the legislature’s future focus will be on “fairness and efficiency.” Sponsor Rep. Thomas agreed, stating that “the changes that need to happen now are about the process, helping taxpayers through the process and transparency.” Process and transparency are two themes in H.B. 575’s revisions. Here’s what the bill proposes to change about Ohio’s CAUV program.
Process changes:
- Removes the annual renewal requirement for CAUV. A landowner would not have to submit a renewal each year after initial approval to enroll in the CAUV program.
- Requires county auditors to provide for electronic filing of CAUV enrollment applications.
- Allows a single operation with non-contiguous land in two or more counties to file one application for all parcels in the county where a majority of the land exists.
- Requires that property tax bills separately state the “CAUV savings” for the parcel.
- Mandates that a county auditor must provide notice of the soil types and CAUV values to landowners in reappraisal and update years.
- Allows the county auditor to value residential property and wasteland below the CAUV value.
Eligibility changes:
- Authorizes continued CAUV eligibility for tracts or portions lying idle or fallow in the previous year due to state or federal disaster or state of emergency declarations.
- Allows CAUV eligibility for contiguous land that is incidental to the primary use of the land for agricultural purposes, including areas for driveways, access roads, staging, barns, and farm markets.
- States that the CAUV minimum acreage requirement can include non-contiguous tracts that are part of a single operation within one or multiple counties.
While the proposed changes won’t affect the CAUV formula or reduce CAUV taxes, the revisions in H.B. 575 do solve many of the fairness and efficiency problems we see with Ohio’s CAUV program. But it may take legislators a while to get to the CAUV bill. It’s one of dozens of bills waiting for consideration by the House Ways & Means Committee. Even so, let’s hope 2026 brings changes to CAUV in the New Year.
Read H.B. 575 on the Ohio General Assembly’s website.
Providing relief for rising property taxes has been top of mind in the General Assembly this past year. Two weeks ago, the legislature passed four bills meant to tackle this issue. The bills, which each take different approaches to lowering property taxes, are now awaiting consideration by Governor DeWine. But how would each bill address property taxes?
House Bill 129—School District Millage
House Bill 129, available here, was introduced by Representative David Thomas (R, Jefferson). In Ohio, we collect property taxes in units of measure called “mills.” Each mill is equivalent to one-tenth of a cent. In the late 1970s, the Ohio General Assembly passed the “20 mill floor” for school districts, which was meant to guarantee districts a baseline of funding.
However, under current law, not all school district levies count toward the 20-mill floor, which can result in higher property taxes. H.B. 129 would change this by including emergency, substitute, incremental growth, conversion levies, and the property tax portion of combined levies when calculating the 20-mill floor for school districts. The thought is that including more types of levies in the 20-mill floor will reduce property tax rates in school districts with these additional levies. For some more background on school districts and the 20-mill floor, Ohio’s Legislative Service Commission (LSC) has a brief on the subject, available here.
House Bill 186—School District Revenue
House Bill 186, sponsored by Representatives James Hoops (R, Napoleon) and David Thomas (R, Jefferson) also focuses on the 20-mill floor for school districts. The bill, available here, would create a tax credit which would prevent increases in school district property taxes from exceeding the rate of inflation. This would only apply to property owners in a school district on the 20-mill floor. LSC’s analysis of the bill, available here, includes helpful examples of how the tax credit would work.
H.B. 186 also modifies property tax “rollbacks” for residential property, which would ultimately increase the total rollback, or savings, for owner-occupied homes, while eliminating the rollbacks for all other residential property.
House Bill 309—County Budget Commissions
House Bill 309 takes a slightly different approach to lowering property taxes by revising the authority and rules for county budget commissions. Sponsored by Representative David Thomas (R, Jefferson), the bill’s text is available here.
County budget commissions are made up of the auditor, treasurer, and either the prosecuting attorney or tax commissioner in each county. If passed, H.B. 309 would allow county budget commissions to reduce millage on any voter-approved levy if the commission deems the revenue is “unnecessary” or “excessive.” This authority to reduce millage on levies would not include debt levies. Further, county budget commissions would not be permitted to reduce a school district’s operating levy below the 20-mill floor, or to reduce any levy collected below the previous year’s revenue unless they are able to offset the reduction using reserve balances, nonexpendable trust funds, or carryover amounts.
House Bill 335—Property Tax Overhaul
Finally, House Bill 335 was also introduced by Representative David Thomas (R, Jefferson). H.B. 335, available here, would limit inside millage collections to the rate of inflation. This would be accomplished by requiring county budget commissions to adjust the rate of each inside millage levy during the reappraisal of all real property performed every six years under Ohio law, or during the update, which occurs every three years. To see some examples of this language in action, see the LSC’s analysis of the bill, available here.
What’s next?
Each of these four bills aimed at lessening the burden of property taxes have been delivered to Governor DeWine, and await his signature before they can become law. We will certainly keep you updated on what happens with each bill. In the meantime, if you’d like more information about property taxes in Ohio, the Ohio Department of Taxation has a great informational guide here.
Barry Ward, Director, Income Tax Schools at The Ohio State University
Jeff Lewis, Legal Associate, Income Tax Schools at The Ohio State University
Tax practitioners, farmers, and farmland owners are encouraged to connect to the Agricultural and Natural Resources Income Tax Issues Webinar (via Zoom) on December 15th from 8:45 a.m. to 3:30 p.m. The event is sponsored by Income Tax Schools at The Ohio State University and Purdue Income Tax Schools.
The webinar focuses on issues specific to farm tax returns related to agriculture and natural resources and will highlight timely topics and new regulations.
The program is an intermediate-level course for tax preparers whose clients include farmers and rural landowners. Farmers who prepare and file their own taxes will also benefit from the webinar.
Topics to be covered during the Ag Tax Issues webinar include:
Outlook for Farm Economy
Legislative and Regulatory Update
Farm Partnership Tax Matters
Installment Method on the Farm
Healthcare Options for Farmers in 2026
Sale and Exchange of Farm Property
Cost Recovery in 2025 and Beyond
CCC Marketing Assistance Loans
Residual Fertility/Fertilizer Deduction
Taxability of Highly Pathogenic Avian Influenza (HPAI) Indemnity Payments
Income Tax Issues - 4-H & FFA Projects
R&D Tax Credits - Credit for Increasing Research Activities (I.R.C. § 41)
Changes to Corporate Transparency Act – Beneficial Ownership Information (BOI) Reporting
Managing Basis in Estates
The cost for the one-day school is $180 if registered by December 1st. After December 1st, the registration increases to $230. Additionally, the course has been approved for the following continuing education credits:
- Accountancy Board of Ohio, CPAs (6 hours)
- Office of Professional Responsibility, IRS (6 hours)
- Supreme Court of Ohio, Attorneys (5 hours)
Registration also includes the Agricultural Tax Issues Workbook. Early registration (at least two weeks prior to the webinar) guarantees that you’ll receive a workbook prior to the webinar.
Instructors will include Jared Foos (President, Foos Garvin Accounting, Inc & instructor for many Ohio and National Tax Courses), Barry Ward, Jeff Lewis, David Marrison, Robert Moore (all with The Ohio State University) and Michael Langemeier (Purdue University).
The live webinar will also feature options for interaction and the ability to ask questions about the presented material.
More information on the workshop, including how to register, can be found at: https://go.osu.edu/tax2025
For any questions, please contact Barry Ward or Jeff Lewis at taxschools@osu.edu
Barry Ward & Jeff Lewis, Income Tax Schools at The Ohio State University
Are you a farmer or farmland owner wanting to learn more about recent tax law changes which were a part of the One Big Beautiful Bill Act? If so, join us for a live webinar on Friday, November 14, 2025, from 10:00 a.m. to noon, as part of our Farm Office Live Series.
To register visit: https://go.osu.edu/register4fol
This webinar will focus on issues related to farmer and farmland owner income tax returns as well as the latest news on CAUV and property taxes in Ohio. This two-hour program will be presented in a live webinar format via Zoom by OSU Extension Educators Barry Ward, David Marrison, Jeff Lewis, and Robert Moore. Anyone who operates a farm, owns farmland, or rents agricultural property will benefit from this timely update.
Topics to be discussed include:
- Tax Provisions of the One Big Beautiful Bill Act:
- Changes to Section 179 Expensing and Bonus Depreciation
- Changes to 1099 Thresholds
- Changes to Estate Tax Exemption
- And many more….
- Tax Planning in Low Income Years
- Residual Fertility / Excess Fertility Deduction
- Research & Development Tax Credit
- Sale of Inherited Farm Assets
- Valuation of Unharvested Crops
- Special Use Valuation
- Income Tax Issues for 4-H & FFA Projects
- Ohio Tax Update (CAUV/Property Tax Update, Income Tax Changes)
Registration: https://go.osu.edu/register4fol
For more information, contact Barry Ward at ward.8@osu.edu or Jeff Lewis at lewis.1459@osu.edu
Tags: One Big Beautiful Bill, tax law, Tax Update, Ag Tax, Agricultural Tax, Farm Tax, Farmland Owner, Farmer, Income Tax
Comments: 0
By Clint Schroeder, Program Manager for Ohio Farm Business Analysis Program and Eric Richer, Field Specialist, Farm Management
With the projected price discovery period now closed for winter wheat Ohio farmers have until September 30, 2025, to select the crop insurance coverage that best suits their operation. However, the decision on policy type and coverage levels for 2026 crops could be impacted by the passage of the One Big Beautiful Bill Act (OBBBA). Signed into law on July 4, 2025, OBBBA offers higher area-based policy coverage levels, increases premium support, and expands support for beginning farmers and ranchers. This article will highlight these key changes so that producers can make more informed decisions for 2026 production on their farm.
Previously, producers that wanted to purchase Supplemental Coverage Option (SCO) as part of their policy were required to enroll those base acres in the Price Loss Coverage (PLC) program. The OBBBA has decoupled SCO from the traditional Farm Bill decision allowing farmers to enroll in either the Agriculture Risk Coverage (ARC) or PLC program. Additionally, premium support, the subsidy for SCO has increased from 65% to 80%. In 2027 SCO coverage will also increase to 90%, up from the current 86% revenue benchmark. This band of coverage is currently available in the form of the Enhanced Coverage Option (ECO). ECO is currently available at two coverage levels, 86% to 90% and 90% to 95%. The premium support for these policies also increased to 80%. It is important to note that SCO and ECO provide coverage above the individuals’ underlying Multi-Peril Crop Insurance (MPCI) policy but are based off of the county’s production for that year. That is to say, SCO and ECO do not provide additional protection at the unit level for each farm, field and crop.
Premium support across all Basic and Optional Units was also increased by 3 to 5 percentage points. While OBBBA did not specifically raise the premium support for Enterprise Units, the increased subsidy for Basic and Optional Units affects the calculation the Risk Management Agency (RMA) uses to set premium support levels for Enterprise Units. Table 1 outlines the premium support for each coverage level under prior legislation compared to current support under the OBBBA.
|
Table 1: Premium Subsidy Rates: Prior Legislation vs OBBBA |
||||
|
|
Prior Legislation |
OBBBA |
||
|
Coverage Level |
Basic and Optional Units |
Enterprise Units |
Basic and Optional Units |
Enterprise Units |
|
50% |
67% |
80% |
67% |
80% |
|
55% |
64% |
80% |
69% |
80% |
|
60% |
64% |
80% |
69% |
80% |
|
65% |
59% |
80% |
64% |
80% |
|
70% |
59% |
80% |
64% |
80% |
|
75% |
55% |
77% |
60% |
80% |
|
80% |
48% |
68% |
51% |
71% |
|
85% |
38% |
53% |
41% |
56% |
Beginning farmers will also receive an increased subsidy that is tiered based on their years of farming. A Beginning Farmer or Rancher (BFR) is now defined as an individual who has not actively operated and managed a farm or ranch in any state, with an insurable interest in a crop or livestock as an owner-operator, landlord, tenant, or sharecropper for more than 10 crop years. Under prior legislation BFRs received premium support of 10%. The OBBBA increases the subsidy amount to 15% for the first two years, 13% in year three, and 11% in year four. Years 5 through 10 will remain at the 10% additional premium support level.
Implications
The 2026 projected winter wheat price for Ohio is now set at $5.76 per bushel, down from $6.06 per bushel in 2025. The volatility factor for 2025 was .23 and decreased slightly to .20 in 2026. The 2026 MPCI wheat policies will use this price and volatility factor to determine producer premiums. SCO and/or ECO area-based policies can then be added as options, if desired. The corn and soybean projected prices will be determined from February 1-28, 2026 with an insurance signup deadline of March 15. Farmers should consult with their crop insurance agent to receive a quote tailored to their crop, county, unit structure, and approved yield. In some instances, reducing individual coverage and purchasing SCO or ECO may provide additional risk protection at a lower cost.
References
Barry Ward, Director, Income Tax Schools at The Ohio State University
Jeff Lewis J.D., Legal Associate, Agricultural and Resource Law Program, Income Tax Schools
The One Big Beautiful Bill (OBBB) Act (H.R. 1), was passed, signed and became law on July 4th. This Act impacts taxes and agricultural policy among a long list of other important issues. In this post, we list important tax provisions that were included in this legislation. Many of the provisions were law as a part of the Tax Cuts and Jobs Act and were extended and in some cases made permanent by this new Act. There were also a few new provisions that were included in this new legislation. This article will summarize the provisions that should prove to be most important to farmers and others with ag interests.
Qualified Business Income Deduction
The 20 percent Qualified Business Income Deduction (QBID) for sole proprietors and pass-through businesses under I.R.C. § 199A is made permanent by this Act. This includes the I.R.C. § 199A(g) deduction for agricultural cooperatives and their patrons.
This new legislation includes a new minimum $400 deduction for taxpayers with at least $1,000 in “active” qualified business income. Both amounts will be adjusted annually for inflation.
Estate and Gift Tax Exemption
This Act permanently increases the estate and gift tax exemption (basic exclusion or Unified Credit), beginning in 2026, to $15 million per person, indexed for inflation.
Individual Income Tax Rates
The OBBB Act permanently extends the tax rates and brackets enacted by the Tax Cuts and Jobs Act.
Standard Deduction
Beginning in 2025, this Act provides an increase in the Standard Deduction to $15,750 for singles, $23,625 for heads of household, and $31,500 for marrieds filing joint. This increased standard deduction is also made permanent.
Personal Exemption
The personal exemption is permanently repealed by this Act.
Temporary Deduction for Seniors
The OBBB Act provides seniors (those 65 years of age and older) with an additional $6,000 deduction for tax years 2025-2028. Married seniors filing joint returns are entitled to the deduction, as long as they meet the income requirements.
The deduction is available for seniors who take the standard deduction or for those who itemize deductions but does begin to phase out for taxpayers with incomes of $75,000 (single) or $150,000 (MFJ).
Child Tax Credit and Other Dependent Credit
The Act permanently creates a child tax credit of $2,200 (adjusted for inflation) (beginning in 2025) for qualifying children under 17. (Income phase-out thresholds - $200,000 for singles and $400,000 for MFJ). The legislation also makes permanent the $1,400 refundable portion of the credit, indexed for inflation.
The Act also makes permanent the $500 nonrefundable credit for other dependents who do not qualify for the child tax credit, including those over the age of 16.
Additional First Year (Bonus) Depreciation Changes
The OBBB Act permanently increases bonus depreciation to 100 percent for property acquired after January 19, 2025. For property placed in service during the first taxable year ending after January 19, 2025, the taxpayer can elect to use 40 percent bonus depreciation. These provisions also apply to trees and vines planted or grafted after January 19, 2025.
Section 179 Expense Enhancements
The Act permanently increases the maximum Section 179 deduction to $2,500,000 and increases the phaseout threshold amount to $4,000,000 for property placed in services in taxable years beginning after 2024. These amounts will be indexed for inflation after 2025.
Exception from Limit on Business Meal Deduction
The 50 percent deduction for meals for the convenience of employers is scheduled to end at the end of 2025.
1099-MISC and 1099-NEC Requirements
The new law increases the payment threshold to $2,000 per payee to file 1099-MISC and 1099-NEC information returns, beginning with payments made in the 2026 tax year. The current threshold of $600 per payee remains in effect for the 2025 tax year. Reminder: Copies of the Form 1099-NEC or 1099-MISC must also be provided to payees.
1099-K Requirements
The OBBB Act also settles the confusion surrounding 1099-K reporting requirements. The Act provides that third-party settlement organizations are not required to issue a payee a 1099-K unless the payee receives over $20,000 in total payments and conducts more than 200 transactions in a year.
Gain from the Sale or Exchange of Farmland Property to Qualified Farmers
The OBBB Act creates a new election for those selling farmland property to a qualified farmer (an individual who is actively engaged in farming). This election allows the seller to choose to pay their taxes on the gain in four equal installments. The election is available to individuals and other entities that have either farmed the property or leased it to a qualified farmer for 10 years prior to the sale.
The seller can only make the election if the land is subject to a covenant or other legally enforceable restriction which prohibits the use of the property other than as a farm for farming purposes for 10 years after the date of the sale or exchange. A copy of the covenant must be filed with the first tax return.
This provision is effective for sales or exchanges occurring in tax years beginning after July 4, 2025.
Clean Fuel Production Credit
The Act extends the clean fuel production credit under I.R.C. § 45Z for fuel sold through December 31, 2029 but the Act restricts the credit to fuel produced from domestic feedstocks. It also reduces the credit for sustainable aviation fuel from $1.75 per gallon to $1.00 per gallon after 2025.
Carbon Oxide Capture and Sequestration Credit
The current I.R.C. § 45Q carbon oxide sequestration credit remains intact as a part of this Act. It does add a provision to allow all uses (not just sequestration) to receive the same $85/ton rate. The credit is not scheduled to expire until 2033.
Clean Vehicle Credits
The Act ends clean vehicle tax credits for all vehicles purchased after September 30, 2025. The Act also ends the alternative fuel vehicle refueling property credit for property acquired after June 30, 2026.
This article highlights tax provisions that should be of primary interest to those involved in farming and agriculture. This article does not summarize all tax provisions found in the OBBB Act. Information on all provisions found in this Act can be found at Congress.Gov by viewing a summary of the Act: https://www.congress.gov/bill/119th-congress/house-bill/1
Reference: One Big Beautiful Bill Act Implements Significant Tax Package, Iowa State University, Center for Agricultural Law and Taxation, Kristine A. Tidgren, July 9, 2025
OSU Extension Announces Two-Day Tax Schools for Tax Practitioners &
Agricultural & Natural Resources Income Tax Issues Webinar
Barry Ward & Jeff Lewis, Income Tax Schools at The Ohio State University
For over 60 years, Ohio State University has been providing continuing education for tax preparers. Ohio State University offers income tax education designed for tax preparers with some experience preparing and filing federal tax returns for individuals and small businesses. Our schools also provide tax education for beginning professionals and for farmers and farmland owners.
This year, our schools will focus heavily on tax provisions included in the One Big Beautiful Bill (OBBB) legislation passed and signed in July. Our schools will also have presenters from the Ohio Department of Taxation focusing on income tax and property tax provisions impacted by the Ohio Biennial Budget.
Instruction focuses on tax law changes and on the problems faced in preparing individual and business (including farms) tax returns. Highly qualified instructors will explain and interpret tax regulations and recent changes in tax laws. These schools and webinars offer continuing education credits for attorneys, CPAs, EAs, CFPs, and other tax return preparers. More information can be found online: https://farmoffice.osu.edu/tax
Our two-day schools (and 4-part webinar) are designed for individuals who have some experience preparing and filing federal and state tax returns. The two-day courses are considered to be intermediate level. Highly qualified instructors will explain and interpret tax regulations and recent changes. Our two-day schools also have instructors from the Internal Revenue Service (IRS) and the Ohio Department of Taxation (ODT).
Highlights include a detailed look at new and updated tax provisions in the OBBB and the Ohio Biennial Budget. We have three chapters in this year’s National Income Tax Workbook (NITW) that haven’t had recently that may be of interest – Religious Organization Tax Issues, Installment Sales and Tax Benefits of Home Ownership.
What sets our schools apart? Our dedicated instructors who work in the tax industry! We don’t just get you through the class, we get you through the tax filing season.
We also offer a two-hour Ethics Webinar and a six-hour Agricultural and Natural Resources Income Tax Webinar for additional continuing education credits. All of our courses are taught by some of the industry's top experts!
Registration for our 2-day schools and four-part webinar includes a hard copy of the 600+ page National Income Tax Workbook prepared by the Land Grant University Tax Education Foundation (“LGUTEF”), access to past workbooks, the opportunity to order the 2026 Checkpoint Federal Tax Handbook at a substantial discount, and 50% off our Ethics/PSR Webinar.
Registration for 2025 is open and can be found by visiting: go.osu.edu/tax2025
If you cannot register online, email taxschools@osu.edu to set up an alternative.
Dates and Locations for 2025 Income Tax Schools
Oct. 29-30 Ole Zim’s Wagon Shed, Gibsonburg (Fremont)
Nov. 3-4 Presidential Banquet Center, Kettering (Dayton)
Nov. 6-7 Old Barn Restaurant & Grill, Lima
Nov. 12-13 Ashland University, John C. Meyers Convocation Center, Ashland
Nov. 17-18 Muskingum County Conference and Welcome Center, Zanesville
Nov. 20-21 Hartville Kitchen, Hartville
Dec. 2-3 Nationwide & Ohio Farm Bureau 4-H Center, Columbus
Dec. 8, 9, 11,12 Four-Part Virtual Webinar Series, Zoom
Special Offerings:
Nov. 24-25 - Intro to Tax Course (Columbus)
Dec. 5 - Ethics Webinar, Zoom
Dec. 15 - Ag Tax Issues Webinar, Zoom
Two-Day Tax Schools Topics Include:
- New Legislation – Focused on tax provisions in OBBB
- Ohio Tax Update
- Individual Tax Issues
- Retirement Tax Issues
- Business Tax Issues
- Religious Organization Tax Issues
- Installment Sales
- Tax Benefits of Home Ownership.
- Business Entity Tax Issues
- IRS Issues
- Trusts and Estates
- Agricultural and Natural Resource Tax Issues
- Rulings and Cases
A sample chapter from a past workbook can be found at:
https://taxworkbook.com/about-the-tax-workbook/
In addition to the tax schools, the program offers a separate, two-hour ethics webinar that will broadcast Monday, Dec. 5th. The webinar is $30 for school attendees and $60 for non-attendees and is approved by the IRS and the Ohio Accountancy Board for continuing education credit.
A webinar on Ag Tax Issues will be held Thursday, Dec. 15th from 8:45 a.m. to 3:30 p.m. If you are a tax practitioner that represents farmers or rural landowners or are a farmer or farmland owner that prepares your own taxes, this webinar is for you. It will focus on key topics and new legislation related specifically to these income tax returns.
Registration, which includes the Ag Tax Issues workbook, is $180 if registered at least two weeks prior to the webinar. After November 29, registration is $230.
Intro to Tax Preparation Course
Our Introduction to Tax Preparation for the Beginning Tax Professional Course is offered in Columbus on Nov. 24-25, at the Nationwide & Ohio Farm Bureau 4-H Center. This introductory course seeks to not only introduce beginning tax professionals to tax verbiage, concepts, and law, but also inject real world experience to help beginning tax professionals avoid mistakes a new preparer generally makes. We begin instruction by covering the basics and by the end of Day 2, attendees will have completed a sample return. For more information on this course see this page: https://farmoffice.osu.edu/tax/introduction-tax-preparation-course
For more information, you can contact Barry Ward or Jeff Lewis at taxschools@osu.edu
They can also be reached by phone. Barry Ward - 614-688-3959, Jeff Lewis - 614-247-1720
Tags: tax, Tax Education, Ag Tax, One Big Beautiful Bill, OBBB, BBB, tax law
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Guest author: Carl Zulauf, Emeritus Professor, Department of Agricultural, Environmental, and Development Economics, Ohio State University
Note: The 2025 Reconcilation Bill (known "One Big Beautiful Bill Act") was signed into law by President Donald Trump on July 4, 2025. We thank our guest author and Farm Bill expert, Dr. Carl Zulauf, for his analysis of the key farm bill provisions of this legislation. This article was published on July 11 and updated on September 5, 2025.
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)
For Thrifty Food Plan specifies household size adjustment factors relative to 4-person household.
Starting October 1, 2025, cost of Thrifty Food Plan is indexed annually for CPI inflation.
Makes it more difficult for reevaluations of the Thrifty Food Plan increase cost more than inflation.
Expands SNAP work requirements to adults age 55-64 and adults with children age 14-17.
Restricts availability of standard utility allowance and prohibits use of internet expenses.
If a state’s SNAP payment error rate exceeds 6%, requires state matching share of 5% to 15% depending on error rate. (ASSESSMENT: reduces Federal spending more than benefits.)
Reduces Federal share of administering SNAP from 50% to 25% starting FY (Fiscal Year) 2027.
Eliminates National Education and Obesity Prevention Grant Program ($550 million / year).
Reduces access to SNAP for non-US citizens by specifying groups that have access.
Funds Farm to Food Bank Projects under Emergency Food Assistance Program through FY2031.
COMMODITY SUPPORT PROGRAM PRICES THROUGH 2031 CROP YEARS
|
|
|
2024 |
2025 |
|
2024 |
2026 |
|
|
Statutory |
Statutory |
Loan |
Loan |
||||
|
Reference |
Reference |
Percent |
Rate |
Rate |
Percent |
||
|
Commodity |
Unit |
Price |
Price |
Increase |
Price |
Price |
Increase |
|
|
|
|
|
|
|
|
|
|
Wheat |
Bushel |
$5.50 |
$6.35 |
15% |
$3.38 |
$3.72 |
10% |
|
Barley |
Bushel |
$4.95 |
$5.45 |
10% |
$2.50 |
$2.75 |
10% |
|
Oats |
Bushel |
$2.40 |
$2.65 |
10% |
$2.00 |
$2.20 |
10% |
|
Peanuts |
Pound |
$0.268 |
$0.315 |
18% |
$0.178 |
$0.195 |
10% |
|
Corn |
Bushel |
$3.70 |
$4.10 |
11% |
$2.20 |
$2.42 |
10% |
|
Grain Sorghum |
Bushel |
$3.95 |
$4.40 |
11% |
$2.20 |
$2.42 |
10% |
|
Soybeans |
Bushel |
$8.40 |
$10.00 |
19% |
$6.20 |
$6.82 |
10% |
|
|
|
|
|
|
|
|
|
|
Dry Peas |
Pound |
$0.1100 |
$0.1310 |
19% |
$0.0615 |
$0.0687 |
12% |
|
Lentils |
Pound |
$0.1997 |
$0.2375 |
19% |
$0.1300 |
$0.1430 |
10% |
|
Canola |
Pound |
$0.2015 |
$0.2375 |
18% |
$0.1009 |
$0.1110 |
10% |
|
Large Chickpeas |
Pound |
$0.2154 |
$0.2565 |
19% |
$0.1400 |
$0.1540 |
10% |
|
Small Chickpeas |
Pound |
$0.1904 |
$0.2265 |
19% |
$0.1000 |
$0.1100 |
10% |
|
Sunflower Seed |
Pound |
$0.2015 |
$0.2375 |
18% |
$0.1009 |
$0.1110 |
10% |
|
Flaxseed |
Bushel |
$11.28 |
$13.30 |
18% |
$5.6504 |
$6.22 |
10% |
|
|
|
|
|
|
|
|
|
|
Mustard Seed |
Pound |
$0.2015 |
$0.2375 |
18% |
$0.1009 |
$0.1110 |
10% |
|
Rapeseed |
Pound |
$0.2015 |
$0.2375 |
18% |
$0.1009 |
$0.1110 |
10% |
|
Safflower |
Pound |
$0.2015 |
$0.2375 |
18% |
$0.1009 |
$0.1110 |
10% |
|
Crambe |
Pound |
$0.2015 |
$0.2375 |
18% |
$0.1009 |
$0.1110 |
10% |
|
Sesame Seed |
Pound |
$0.2015 |
$0.2375 |
18% |
$0.1009 |
$0.1110 |
10% |
|
|
|
|
|
|
|
|
|
|
Rice (long grain) |
Pound |
$0.1400 |
$0.1690 |
21% |
$0.0700 |
$0.0770 |
10% |
|
Rice (med/short grain) |
Pound |
$0.1400 |
$0.1690 |
21% |
$0.0700 |
$0.0770 |
10% |
|
Rice (temperate japonica) |
Pound |
$0.1730 |
not given |
$0.0700 |
not given |
||
|
Seed Cotton |
Pound |
$0.3670 |
$0.4200 |
14% |
$0.2500 |
||
|
Upland Cotton |
Pound |
$0.45-$0.52 |
$0.55 |
||||
|
Extra Long Staple Cotton |
Pound |
$0.95 |
$1.00 |
5% |
|||
|
|
|
|
|
|
|
|
|
|
Graded Wool |
Pound |
$1.15 |
$1.60 |
39% |
|||
|
Ungraded Wool |
Pound |
$0.40 |
$0.55 |
38% |
|||
|
Mohair |
Pound |
$4.20 |
$5.00 |
19% |
|||
|
Honey |
Pound |
$0.69 |
$1.50 |
117% |
COMMODITY SUPPORT PROGRAM
Price Loss Coverage (PLC) Reference Prices
Starting with 2031 crop year, prior year’s statutory reference price is increased by multiplying it by 1.005.
Increases effective reference price escalator formula from 85% to 88% of 5-year Olympic average market year price. Effective reference price cannot exceed 113% (was 115%) of statutory reference price.
Agriculture Risk Coverage (ARC)
Increases ARC guarantee to 90% from 86% of benchmark revenue starting with 2025 crops.
ARC payment band increased to 12% from 10% starting with 2025 crop year
Allows producers to buy SCO (Supplemental Coverage Option) crop insurance if enrolled in ARC (not currently allowed).
Commodity Program for 2025 Crop Year
For crop year 2025 only, program participants receive higher of ARC or PLC payment. (ASSESSMENT: likely done since Congress altered 2025 crop year program parameters; but may signal a potential program provision in the next farm bill.)
Cotton
Increases payment rate for storage cost of upland and extra-long cotton under loan.
Upland cotton marketing assistance loan is repaid through 2032 at lower of (a) loan rate plus interest or (b) lowest world market price over a 30-day period starting the day the loan is repaid. Lowest market price is an average of the 3 (replaces 5) lowest-priced growths.
For Extra Long Staple Cotton, loan repayment rate is lower of (a) loan rate plus interest or (b) world market price, adjusted for U.S. quality, location, and transportation costs. Further adjustments are possible if the Secretary of Agriculture determines any one of a list of conditions in the legislation is met.
Assistance for textile mills increases from 3 to 5 ¢ / pound of upland cotton on August 1, 2025
Long Grain and Medium Grain Rice
Marketing loans repaid at lower of (a) loan rate plus interest or (b) world market price.
Commodity Program Payment Limits
Increases payment limit for Title I programs from $125,000 to $155,000 per payment entity starting with the 2025 crop year.
Payment limit is indexed to CPI inflation starting with the 2025 crop year.
Adds (1) certain partnerships (subchapter K of chapter 1 of the Internal Revenue Code of 1986), (2) certain S-Corporations (section 1361 of IRS Code, and (3) certain Limited Liability Companies that do not affirmatively elect to be treated as a corporation to joint ventures and general partnerships as a “qualified pass-thru entities” eligible to receive government program payments. Qualified pass-through entities are eligible for ARC and PLC payment limits equal to the payment limit per person multiplied by the number of eligible persons or legal entities that own the qualified pass-through entity.
Allows producers and business entities with Average Gross Income (AGI) from agricultural activities exceed $900,000 to participate in certain disaster assistance and conservation programs if 75% or more of their AGI is derived from eligible agricultural activities.
New Base Acres
Up to 30 million new base acres can be added by eligible farms effective the 2026 crop year.
For a FSA (Farm Service Agency) farm to be eligible,
- A current covered program commodity must have been planted some year during 2019-2023.
For an eligible FSA farm,
- For a FSA farm, planted acres must exceed total base acres for all covered program commodities, excluding unassigned generic cotton base, in effect on September 30, 2024. Planted acres equal
- 2019-2023 average, all years included, of acres planted or prevented from being planted to program commodities on the FSA farm; plus
- lesser of
- 15% of total acres on the FSA farm or
b. 2019-2023 average, all years included, of acres planted or prevented from being planted to eligible noncovered commodities.
Eligible noncovered commodity acres are acres planted or prevented from being planted on a farm to commodities other than covered commodities, trees, bushes, vines, grass, or pasture (including cropland that was idle or fallow), as determined by Secretary of Agriculture.
- New base acres = [(planted plus prevent planted acres calculated as above) plus (unassigned generic cotton base acres) minus (total base acres as of 9/30/2024)].
- No new covered commodities are created. New base acres are added to base acres of a current covered commodity planted on the FSA farm over 2019-2023 using the following ratio:
[(2019-2023, all years included, average of acres planted or prevent planted to the given covered commodity) to (2019-2023, all years included, average of total acres planted or prevent planted to all covered commodities on the farm)].
- Other than under an established practice with FSA of double cropping covered commodities, an owner must elect what covered commodity planted or prevent planted on the same acre is used to calculate the 5-year average.
Limits
- A FSA farm’s total base acres cannot exceed its total acres.
- New base acres are capped at 30 million for the US. If the cap is effective, an across-the-board, pro-rated reduction is applied to all eligible new base acres.
PLC Payment Yield for New Base Acres
8. A FSA farm’s current PLC yield for a crop is used. If the farm has no PLC yield for the crop, average PLC yield for the county in which the farm is situated or current FSA methods for this situation will be used.
ASSESSMENT: A major expansion of commodity program payments to current non-program crops even though no new program commodities are created. Base acres are added to base acres of existing program commodities but can be added for acres in current non-program crops. Hay, the third largest US field crop, benefits the most.
Sugar Program
Increases the 2025-2031 crop year loan rates for raw cane sugar and for refined beet sugar.
Increases storage rate paid for sugar forfeited to the government.
If marketing allotments are increased, prioritizes beet sugar processors with available sugar.
Requires upfront reallocation of a TRQ (Tariff Rate Quota) shortfall when quota year starts and subsequent reallocation of any remaining shortfall to quota holding countries by March 1.
Requires a study of whether additional conditions are needed for refined sugar imports.
Dairy Margin Coverage (DMC)
Updates production history to highest annual milk marketed during any one of the 2021, 2022, or 2023 calendar year.
Raises maximum coverage from 5 million to 6 million pounds of milk.
Extends 25% discount on DMC premiums if coverage is locked in from 2026 through 2031.
Livestock Loss Assistance
Payment rate is 100% of market value of loses from predation by federally protected species.
Payment rate is 75% of market value of losses from adverse weather or disease.
Secretary of Agriculture may consider regional price premiums when assessing market value
Adds a supplemental payment for loss of unborn livestock effective January 1, 2024.
For livestock forage disaster program, provides 1 monthly payment for county having US Drought Monitor rating of D2 (severe drought) intensity in any area of county for at least 4 consecutive weeks during county’s normal grazing period. Two monthly payments can be received if D2 occurs any 7 of 8 consecutive weeks during the normal grazing period.
Farm-Raised Fish, Honey Bee, and Tree Loss Assistance
Adds assistance for losses of farm-raised fish due to piscivorous birds.
Sets standard mortality rate at 15% when determining honeybee colony losses.
For Tree Assistance Program, losses are triggered if normal mortality rates are exceeded. Reimbursement rate increased from 50% to 65% of pruning, removal, and other costs.
CROP INSURANCE
Premium Subsidy
Sets highest coverage level at 85% for individual yield or revenue insurance, 90% for individual yield or revenue insurance aggregated across multiple commodities, and 95% for area yield or revenue insurance.
Increases SCO (Supplemental Coverage Option) coverage level from 86% to 90% and premium subsidy rate from 65% to 80%.
Increases premium subsidy for basic and optional units as follows:
|
Coverage Level |
CAT |
50% |
55% |
60% |
65% |
70% |
75% |
80% |
85% |
|
Current Subsidy |
100 |
67 |
64 |
64 |
59 |
59 |
55 |
48 |
38 |
|
New Subsidy |
100 |
67 |
69 |
69 |
64 |
64 |
60 |
51 |
41 |
NOTE: Higher premium subsidies for basic and optional units could potentially require USDA to increase premium subsidy schedules for some enterprise and whole farm units. Reason is U.S.C. §15018(e)(5) requires USDA to pay premium subsidies for enterprise and whole farm units that provide the same dollar amount of premium subsidy per acre as provided for the equivalent basic or optional units, up to a maximum of 80% of the total premium rate.
Administrative and Operating (A&O) Expenses
Starting with the 2026 reinsurance year, states that have loss ratios greater than 120% for insurance contracts that exclude catastrophic and area insurance contracts are eligible for additional A&O reimbursements equal to 6% of net book premium.
Starting with the 2026 reinsurance year, specialty crop policies under the A&O cap will receive a minimum reimbursement of 17% of the premium.
Starting with the 2026 reinsurance year, A&O reimbursement cap is indexed to CPI inflation.
Beginning Farmers and Ranchers
Extends eligibility to 10 years from 5 years, and increases subsidy rate for them by 5 percentage points (pp) for 1st and 2nd years, by 3 pp for 3rd year, and by 1 pp for 4th year.
Other
Increases funds for monitoring program compliance and integrity from current $0.004 billion / FY to $0.006 billion / FY plus $0.010 billion for a related statute for FY2026 and after.
Requires index-based Poultry Insurance Pilot for contract poultry growers to insure weather risk that raises utility costs.
CONSERVATION
Rescinds unobligated funds for conservation programs appropriated by IRA (Inflation Reduction Act of 2022).
Increases Farm Bill baseline spending for … (only FY2026 and FY2031 amounts listed (billion $))
FY2026 FY2031
EQIP (Environmental Quality Incentives Program) $2.655 $3.255
CSP (Conservation Stewardship Program) $1.300 $1.375
ACEP (Agricultural Conservation Easement Program) $0.625 $0.700
RCPP (Regional Conservation Partnership Program) $0.425 $0.450
Watershed Protection and Flood Prevention $0.150 $0.125
Provides funds for (1) Grassroots Source Water Protection Program, (2) Voluntary Public Access and Habitat Incentive Program, and (3) Feral Swine Eradication and Control Pilot Program.
NOTE: Authority for CRP (Conservation Reserve Program) is set to expire at the end of FY2025 and was not extended in this legislation. It will need to be extended in some other legislation.
FORESTRY: Rescinds unobligated funds appropriated under IRA for many forest and tree programs.
TRADE: Authorizes $0.285 billion / year starting in FY2027 for a new Supplemental Agricultural Trade Promotion Program, which is available to all agricultural product exports.
RESEARCH: Authorizes funds for (1) Urban, Indoor, and Other Emerging Agricultural Production Research, Education, and Extension Initiative, (2) Foundation for Food and Agriculture Research, (3) Scholarships for Students at 1890 Institutions, (4) Assistive Technology Program for Farmers with Disabilities, (5) Specialty Crop Research Initiative, and (6) Research Facilities Act.
ENERGY: Extends mandatory funds through FY2031 for Bioenergy Program for Advanced Biofuels.
HORTICULTURE: Increases mandatory funds for (1) Plant Pest and Disease Management and Disaster Prevention Program ($0.075 to $0.090 billion / year), (2) Specialty Crop Block Grant Program ($0.085 to $0.100 billion / year), and (3) Specialty Crop Research Initiative (0.080 to 0.175 billion).
Authorizes funds for Emergency Citrus Disease Research and Development Trust Fund.
OTHER: Authorizes funds for (1) Organic Production and Market Data Initiative, (2) Organic Certification, and Trade Tracking and Data Collection, (3) National Organic Certification Cost Share Program, and (4) Multiple Crop and Pesticide Use Survey.
Authorizes $0.233 billion / year through FY2030 for Animal Disease Prevention and Management, split $0.010 billion for National Animal Health Laboratory Network, $0.070 billion for NADPRP (National Animal Disease Preparedness and Response Program), and $0.153 billion for National Animal Vaccine Bank. Provides $75 million for FY 2031 and beyond, of which at least $45 million is for NADPRP.
Authorizes $0.003 million for Sheep Production and Marketing Grant Program.
Extends authorization for Pima Agriculture Cotton Trust Fund, Agriculture Wool Apparel Manufacturers Trust Fund, Wool Research, Development, and Promotion Trust Fund.
SOURCES
US Congress (119th). Accessed August 2025. H.R. 1 – One Big Beautiful Bill. CONGRESS.GOV https://www.congress.gov/bill/119th-congress/house-bill/1.
US Congressional Research Service. Updated August 15, 2025. Supplemental Nutrition Assistance Program (SNAP) and Related Nutrition Programs in P.L. 119-21: An Overview. CRS Report R48552. https://crsreports.congress.gov
US Congressional Research Service. Updated July 16, 2025. Selected Horticultural Provisions in FY2025 Budget Reconciliation (P.L. 119-21, Title I). CRS Insight IN12559. https://crsreports.congress.gov
US Congressional Research Service. June 6, 2025. One Big Beautiful Bill Act (H.R. 1): Section 10102, Agricultural Conservation. CRS Insight IN12560. https://crsreports.congress.gov
US Congressional Research Service. June 23, 2025. One Big Beautiful Bill Act (H.R. 1): Title I, Farm Safety Net and Miscellaneous Provisions. CRS Report R48574. https://crsreports.congress.gov
Income Tax Schools at The Ohio State University Announces Summer Income Tax School Webinar
Barry Ward & Jeff Lewis, OSU Income Tax Schools
An “Update on Current Tax Issues and Law Changes” along with a section on “Taxpayers in Trouble” are the focus of the upcoming Summer Tax School Webinar featured by Income Tax Schools at The Ohio State University.
This webinar is scheduled for August 11th and registration is now open. The registration page can be accessed at: go.osu.edu/summertaxschool.
This Summer Tax School is designed to update tax preparers about current tax issues, new law changes and tax legislation. This school will also include a section on working with “taxpayers in trouble”.
The morning session will focus on update issues and include:
- Updates on current tax issues at the federal, state and municipal level
- Updates on the recently passed legislation and/or progress on pending tax legislation
The afternoon session on working with “Taxpayers in Trouble” will enable you to:
- Select relevant information from Forms 1099-A and 1099-C
- Identify the proper IRS form on which to report the deemed sale of the foreclosed property
- Determine if a taxpayer is insolvent
- Explain the tax treatment of cancellation credit card and other consumer debt
- Complete Form 982
Webinar Agenda for August 11th:
9:00 Webinar room opens
9:20 Welcome and introductions
9:30 Webinar begins
Noon Lunch break
12:40 Webinar resumes
2:30 Webinar concludes
Continuing Education Credit Hours: 5
Continuing Legal Education Hours: 4
Instructors for this webinar include Jahn Lawrence and Melinda Garvin.
Registration cost is $200 and includes 5 hours of Continuing Education (CPE) and 4 hours of Continuing Legal Education (CLE). Registration information and the online registration portal can be found online at: go.osu.edu/summertaxschool.
Participants may contact Barry Ward at 614-688-3959, taxschools@osu.edu or Jeff Lewis at 614-292-2433, taxschools@osu.edu for more information.
By: David L. Marrison, Field Specialist, Farm Management, Barry Ward, Director of the OSU Income Tax Schools, and Jeff Lewis, Attorney and Program Coordinator- OSU Extension.
It is tax season! The Internal Revenue Service (IRS) expects over 140 million individual tax returns to be filed by the April 15, 2025 deadline. With tax returns set to be accepted by the IRS starting January 27, it's crucial for individuals and businesses to stay on top of important tax reporting deadlines.
One of the key requirements during this time is the proper reporting of income through 1099 forms. These forms, which report various types of non-wage income, need to be furnished to taxpayers by January 31. Additionally, copies also need to be sent to the IRS by the January 31st deadline (with a few exceptions) to avoid penalties and ensure timely processing of tax returns.
This article will provide an overview of 1099 forms, highlighting the specifics of the 1099-NEC, 1099-MISC, and 1099-K forms. Additionally, we will share reporting deadlines, penalties for non-reporting, and provide resource links from the IRS.
What is a 1099 Information Return?
A 1099 form is an information return used by businesses, financial institutions, and other organizations to report various types of income paid to individuals who are not employees. These forms are typically issued to independent contractors, freelancers, and vendors to report payments made for services rendered, interest earned, dividends, and other income types.
These returns help ensure that individuals and entities report income correctly on their tax returns. There are over 20 different 1099 forms. The major forms which farm families may receive include:
- 1099-NEC Non-employee compensation
- 1099-MISC Miscellaneous income
- 1099-K Income from third party vendors
- 1099-G Unemployment compensation or other government programs
- 1099-INT Interest income
- 1099-DIV Investment dividends and distributions
- 1099-PATR Taxable distributions from cooperatives
- 1099-S Proceeds from real estate transactions
1099-NEC
One of the most common 1099 forms used is the 1099-NEC, which reports payments to non-employees. The form is required to be issued when compensation totaling more than $600 (per year) is paid to a nonemployee for certain services performed for your business. If the following four conditions are met, you must generally report payment for nonemployee compensation on Form 1099-NEC:
- You made the payment to someone who is not your employee.
- You made the payment for services for your trade or business (including government agencies and nonprofit organizations).
- You made the payment to an individual, partnership, estate, or in some cases, a corporation.
- You made payments to the payee of at least $600 during the year.
Examples of “nonemployee compensation” could include hiring a neighboring farmer to harvest, spray, or plant your crops or independent contractors such as crop consultants, mechanics, accountants, and veterinarians. Payment for parts or materials used to perform the service (if the supplying of the parts or materials was incidental to providing the service) is included in the amount reported as nonemployee compensation.
Reporting is needed for payments made to unincorporated businesses (ie. sole proprietorship or a LLC that has elected to be taxed as a sole proprietor or partnership) for compensation of $600 or greater. Generally, payments to a corporation, or a LLC which has elected to be taxed as a corporation, do not require a 1099-NEC to be issued. Two exceptions which should be noted are for payments of $600 or greater to an attorney or veterinarian, regardless of business entity (corporation or unincorporated), need to be reported on the Form 1099-NEC.
If you are required to file a Form 1099-NEC, you must furnish a statement to the recipient and to the IRS by January 31 of each year or the next business day, if the due date is on a weekend or holiday. For the tax reporting year of 2024, the form is due January 31, 2025.
A form 1099-NEC can be issued even if the payment is below the $600 threshold or is to a party that you are in doubt as to whether you are required to issue this informational return. There are no prohibitions or penalties for doing this.
Previously, business owners would file Form 1099-MISC to report non-employee compensation. As a historical note, the Form 1099-NEC was re-introduced in 2020. It was previously used by the IRS until 1982 when the IRS added box 7 to Form 1099-MISC and discontinued the 1099-NEC form. Now, this compensation is listed in Box 1 on the 1099-NEC.
A reminder that greater scrutiny has been given to the improper classification of an employee as an independent contractor. It is your duty to make sure that you have classified properly. For tax purposes, the IRS provides guidance on making this determination through behavior control, financial control, and the relationship of the parties. Details can be found in IRS publication 1779 located at: https://www.irs.gov/pub/irs-pdf/p1779.pdf
Form 1099-MISC
The Form 1099-MISC is used to report a variety of income payments made to others and are made during your trade or business (not personal). These include, but are not limited to:
- At least $10 in royalties (box 2)
- At least $600 in:
- Rents (box 1)
- Prizes and awards (box 3)
- Medical and health care payments (box 6)
- Crop Insurance proceeds (box 9)
Reporting is needed for payments made to unincorporated businesses (ie. sole proprietorship or a LLC that has elected to be taxed as a sole proprietor or partnership) for compensation for each reporting thresholds ($600 or greater for rents or $10 for royalties). Generally, payments to a corporation, or a LLC which has elected to be taxed as a corporation, do not require a 1099-MISC to be issued. However, there are exceptions as noted previously.
One question, we receive from farmers is “do I need to issue a 1099 to the landowners which I rent ground from?” As a farmer, if you made the payment for services for your trade or business (ie. your farm business), then you will need to issue a 1099-MISC to landowners who receive $600 or more in land rental payments (in aggregate).
The reporting deadlines for the 1099-MISC forms are a little different than the 1099-NEC. The 1099-MISC must be to the recipient by January 31 (similar to 1099-NEC) but are not due to the IRS until February 28 for paper copies or March 31 for e-filed returns.
1099-K
The 1099-K form may be a new form to some of our farm managers. Form 1099-K tracks income made from selling goods or providing services via payment apps and online marketplaces. Examples include (but are not limited to) PayPal, Venmo, Square, and Ebay. Payment card companies, payment apps, and online marketplaces are required to fill out Form 1099-K and send it to the taxpayer and to the IRS by January 31. You will receive a 1099-K if:
- If you take direct payment by credit or bank card for selling goods or providing services. If customers pay directly by credit, debit or gift card, you will receive a Form 1099-K from the payment processor or payment settlement entity, no matter how many payments received or how much they were for.
- A payment app or online marketplace is required to send you a Form 1099-K if the payments received for goods or services total over $5,000 (2024 limits). However, they can send you a Form 1099-K with lower amounts.
Please note the reporting thresholds will change going forward. Third-party payment network transactions previously only needed to be reported for payees with more than 200 transactions and $20,000 in aggregated payments. The American Rescue Plan Act of 2021 repealed this threshold and requires reporting for aggregate payments of $600 or more, regardless of the number of transactions.
The IRS is taking a phased in approach to the implementation of the American Rescue Plan Act of 2021 and guidance was provided on November 26, 2024 (https://www.irs.gov/pub/irs-drop/n-24-85.pdf). The phased-in reporting thresholds are:
- $5,000 in 2024
- More than $2,500 in 2025
- More than $600 in calendar year 2026 and thereafter.
Whether or not you receive a Form 1099-K, you must still report any income on your tax return. If you accept payments on different platforms, you could get more than one Form 1099-K. Personal payments from family and friends should not be reported on Form 1099-K because they are not payments for goods or services.
Additional Note:
Starting in tax year 2023, if you have 10 or more information returns, you must file them electronically. Electronic copies can be submitted through the IRIS Taxpayer Portal at http://irs.gov/iris or through a third-party software provider.
Penalties
If you fail to file a correct information return by the due date (to the IRS and/or taxpayer) and cannot show reasonable cause, you may be subject to a penalty. Penalties are changed for each information return which is failed to be filed to the IRS on time and to each payee (a penalty for each). These penalties can range from $60 to $660 depending on the number of days which the filing is late. Additional penalties can also be assessed for intentional disregard. Interest is also charged. More details can obtained at: https://www.irs.gov/payments/information-return-penalties
IRS Resources:
The following resources are available from the IRS with regards to the informational returns discussed in this article.
Publication 1220: https://www.irs.gov/pub/irs-pdf/p1220.pdf
1099-NEC: https://www.irs.gov/forms-pubs/about-form-1099-nec
1099-MISC: https://www.irs.gov/forms-pubs/about-form-1099-misc
1099-K: https://www.irs.gov/businesses/understanding-your-form-1099-k
1099 Penalties: https://www.irs.gov/payments/information-return-penalties
Disclaimer:
The information provided in this article is for educational purposes. This article was designed to provide accurate tax education information. Farm managers are encouraged to seek the assistance of qualified tax professionals with the completion of their taxes.
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