LLCs, S-Corps, and the One Big Beautiful Bill Act of 2025: Why Farmers May Finally Have the Best of Both Worlds

By James R. Angell, Managing Partner – Kennedy Berkley, P.A.

For years, farm families had to make a tough choice when it came to structuring their operations: 

• Stay a general partnership and qualify for multiple USDA Farm Service Agency (FSA) payment limits. 

• Or form an LLC or S-Corp to gain liability protection — but give up those extra payment limits. 

It was a frustrating dilemma that left many families feeling they had to sacrifice long-term security just to make the numbers work. We’ve sat at the kitchen tables of farm clients who wanted to protect what they’d built for the next generation, but couldn’t justify giving up thousands of dollars in program benefits.  That difficult trade-off is finally gone. 

Thanks to the new Farm Bill — officially called the One Big Beautiful Bill Act of 2025 (“OBBB Act”), signed July 4, 2025 — LLCs and S-Corps that are taxed as pass-throughs can now qualify for multiple FSA payment limits, just like partnerships always have.  This is a major game-changer. Farm families no longer have to choose between protecting their personal assets and maximizing their farm program benefits.

For once, Washington got it right — and now you can have both. 

Old FSA Rules: Why Partnerships Got More Payment Limits 

Before the Farm Bill reform, partnerships had a clear advantage.  For example, a general partnership with three equal owners could qualify for three separate FSA payment limits (previously $125,000 per person).

But if those same three people formed an LLC or S-Corp, the entire operation was capped at a single limit.  In other words, choosing liability protection meant leaving money on the table. 

New FSA Rules: LLCs and S-Corps on Equal Ground with Partnerships 

The new Farm Bill created a category called Qualified Pass-Through Entities (“QPTEs”). This group now includes: 

- General partnerships and joint ventures 

- LLCs taxed as partnerships 

- S-Corporations 

Here’s what it means: each actively engaged owner in a QPTE now qualifies for their own $155,000 (indexed for inflation) FSA payment limit (an increase from the previous $125,000).  The only entity still capped at a single limit is a C-Corporation.  As I’ve said many times, “Farmers can finally organize their operations for liability protection and full program eligibility. That’s long overdue.”  This reform means you no longer have to give up sound business planning just to maximize your program payments — now you can have both. 

How the One Big Beautiful Bill Act of 2025 Affects Your Farm Operation 

So what does all of this mean for your farm or ranch? Let’s break it down: 

General Partnerships – You no longer have to stay in a general partnership just to preserve multiple FSA payment limits. Converting to an LLC taxed as a partnership now gives you both liability protection and full payment eligibility — provided each owner meets FSA’s Actively Engaged in Farming (AEF) standards. 

C-Corporations – Unfortunately, C-Corps are still limited to one payment cap for the entire entity. For many operations, it may be worth talking with your attorney and CPA about whether converting to an S-Corp or LLC would provide more flexibility. My inbox is always open for these questions. 

LLCs and S-Corps – These entities now qualify for multiple limits, but there’s a catch: each owner must meet FSA’s “Actively Engaged in Farming” (AEF) requirements. In plain terms, every owner must show real labor or management participation and have capital at risk in the operation. 

The bottom line: entity choice matters more than ever, but for the first time, you don’t have to choose between protecting your family’s assets and maximizing farm program payments. 

Timing Matters: Key Dates for LLC and S-Corp Restructuring 

For the 2025 crop year, the June 1 ownership cut-off date has already passed. That means any restructuring you do this fall won’t impact 2025 — but it will apply to the 2026 crop year. 

Here’s what you should be doing now to prepare: 

1. Review your structure with your attorney and CPA. 

2. Confirm your tax status — your entity needs to be taxed as a partnership or S-Corp to qualify as a QPTE. 

3. Document participation — make sure every owner meets FSA’s AEF standards for labor or management. 

4. Update filings on time — submit ownership forms (CCC-902 and CCC-901) with FSA before June 1, 2026. 

Planning early ensures your operation is ready to take full advantage of these expanded payment limits — without scrambling at the last minute. 

The Bottom Line: What the Farm Bill Means for Farmers 

This reform finally lets farm families structure their operations in a way that protects what they’ve worked so hard to build — without losing out on program benefits. With the new rules, you don’t have to choose between liability protection and payment eligibility. You can, and should, have both.  But timing matters. The details matter. These changes open doors, but they also create new responsibilities to stay compliant with FSA requirements.  That’s where we come in. At Kennedy Berkley, we’ve been walking alongside farm families for decades, helping them navigate decisions that affect not just today, but the next generation. My advice is simple: don’t wait until the deadline is close. Plan ahead, get good counsel, and make sure your operation is positioned to take full advantage of these changes. 

— Jim Angell, Managing Partner

This article is general information, not legal or tax advice. Facts matter. Work with counsel and your tax advisor to structure and document your operation under the new rules.