New Rule Lets LLC Members Claim Individual Farm Payments
The new One Big Beautiful Bill (HB 1) brings a major win for U.S. farmers by allowing limited liability companies (LLCs), corporations, and other liability-limiting entities to receive multiple Farm Service Agency (FSA) payments.
Under older Farm Bill rules, LLCs and corporations were treated as a single “person” and capped at one annual payment limit of $125,000 for programs such as Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC). Farmers often formed general partnerships to access multiple limits, exposing themselves to personal liability.
HB 1 changes this by treating LLCs and S corporations as pass-through entities, similar to partnerships. Each actively engaged member or shareholder now qualifies for a separate payment limit, adjusted for inflation to $155,000 per person or entity.
For example, a five-member farm family can now form an LLC where each member is eligible for an individual limit while also gaining liability protection. This eliminates the risky choice between higher FSA support and personal legal exposure.
Safeguards remain strong. Every individual must be actively engaged in farming, contributing labor, management, and capital in proportion to their ownership. FSA tracks ownership details, applies adjusted gross income caps, and audits records to ensure compliance and prevent misuse of federal funds.
Farmers currently operating as partnerships can convert to an LLC through a simple process with the Ohio Secretary of State or their own state agency. Filing a Certificate of Conversion is straightforward, typically costs under $100, and preserves operational continuity while adding liability protection.
This legal shift removes the last major reason to operate as a partnership, letting farmers modernize their business structure without sacrificing payment eligibility or protection.