Sponsors (30)
The bill provides substantial tax incentives to boost use of U.S.-sourced agricultural inputs and support farm incomes, but does so at the cost of federal revenue, increased compliance burdens, potential exclusion of import-reliant producers, and a risk that large agribusinesses capture disproportionate benefits.
Farmers and agribusinesses that purchase U.S.-sourced agricultural inputs can reduce their federal tax liability by up to 25% of eligible input costs (capped at $100M per taxpayer per year), directly lowering tax bills for many in the sector.
Farmers and rural communities benefit from increased demand for domestically produced agricultural commodities because the credit incentivizes use of U.S.-sourced inputs, supporting farm incomes and rural economic activity.
Patrons of agricultural cooperatives (individual farmers and small producers) can receive credit value passed through by cooperatives, allowing more direct distribution of benefits to smaller producers.
All taxpayers face reduced federal tax revenue because the credit lowers government receipts, which could widen the deficit or necessitate future spending cuts or tax increases.
Well-capitalized agribusinesses can capture sizable credits (up to $100M per year), risking concentration of benefits with large firms rather than smaller producers.
Farmers who rely on imported or foreign-sourced inputs may be excluded from the credit if their 3-year average domestic share falls below phased thresholds (50% in 2026 rising to 85%), leaving import-dependent producers without relief.
Based on analysis of 2 sections of legislative text.
Introduced February 27, 2025 by David Kustoff · Last progress February 27, 2025
Creates a new nonrefundable business tax credit for agricultural input costs that are domestically produced. The credit equals up to 25% of a taxpayer's qualified domestic agricultural input costs multiplied by the taxpayer's share of domestic inputs, with a per-taxpayer cap of $100 million, and is available for tax years beginning after December 31, 2025. Eligibility depends on a taxpayer's three-year average domestic sourcing share meeting phased minimum thresholds (starting at 50% in 2026 and rising to 85% after 2033). The bill defines which commodities count, lets eligible cooperatives pass credits to patrons, requires the Agriculture Secretary to publish an annual list of commodities that cannot feasibly be produced domestically, and adds special rules for how the credit interacts with existing business-credit limits, AMT, and carryforward periods.