Agriculture and Nutrition Provisions in Senate Tax Bill

The Senate-passed version of H.R. 1, the ”One Big Beautiful Bill Act,” strengthens the farm safety net by raising reference prices under the Price Loss Coverage program (PLC) and the Agriculture Risk Coverage (ARC) program, which both aim to protect farmers from significant income losses from fluctuations in crop prices or revenue shortfalls, and strengthen crop insurance programs and disaster relief for livestock. Also included are major tax provisions benefitting producers, including the immediate expensing of farm equipment, a small business tax break, an increase in the estate tax exemption, and a revised 45Z Clean Fuel credit. The bill also includes significant cuts to the Supplemental Nutrition Assistance Program (SNAP) by tightening work requirements for able-bodied adults and parents of children over the age of 14 and limiting the ability of states to waive work requirements.

Trusted Insights for What's Ahead^®

• Last week, USDA Secretary Brooke L. Rollins published an opinion piece in Newsweek, writing that the bill “increases the farmer safety net, crop insurance, and trade programs. These changes to farm support will allow USDA to return to our core mission of putting Farmers First and restoring rural prosperity across the country.”
• Both House and Senate versions of the bill strengthen the farm safety net by updating the ARC and PLC programs and increase reference prices and commodity loan rates to better reflect current higher production costs and market conditions. The Senate version invests $65.6 billion into the farm safety net, $9 billion more than the House version of the bill.
• The legislation includes several key measures that benefit the biodiesel industry. The Senate version extends the 45Z Clean Fuel Production Credit through the end of 2029, applying it only to feedstocks from the US, Canada, and Mexico. However, the National Corn Growers Association (NCGA) spoke out against the Senate version of the bill which cuts the top payment rate for the 45Z credit from $1.75 to $1 per gallon, “an action that could injure the new market’s growth potential which corn growers feel could have a substantial impact on their profitability for years to come.” The bill also expands the small agri-biodiesel producer tax credit from 10 cents to 20 cents a gallon.
• SNAP provisions include the implementation of a cost-share program proportional to state payment error rates to incentivize states to address benefits fraud. States will be required to contribute a set percentage of the cost of SNAP benefits beginning in fiscal year 2028 if their payment error rate exceeds 6%. The bill is projected to cut spending on food aid by $186 billion, with the majority coming from cuts to SNAP.
• Senate leadership added several provisions to win over the vote of Senator Lisa Murkowski (R-AK), including delayed implementation of the SNAP matching funds requirements for states with the highest payment error rates. (Alaska had the highest payment error rate in 2024.)