NDSU research shines light on effect of tax law on farms
Changes remove the uncertainty many producers were facing heading into 2026.
A new analysis by Andrew Keller, NDSU senior researcher at the Agricultural Risk Policy Center, examines the long-term tax implications of the One Big Beautiful Bill, signed into law in July 2025.
The bill prevents the 2026 sunset of the 2017 Tax Cuts and Jobs Act and introduces new tax provisions aimed at supporting farmers and rural economies.
Keller’s analysis highlights key changes under the OBBB and how they affect farm households, ag businesses, and intergenerational transfers:
• Permanent lower individual tax rates and a higher standard deduction • Enhanced and indexed Child Tax Credit, plus new deductions for seniors
• Restoration of 100% bonus depreciation and permanent QBI deduction
• Expanded estate and gift tax exemption, ensuring smoother family farm succession
“These changes deliver clarity and confidence,” Keller said. “They remove the uncertainty many producers were facing heading into 2026, and they provide meaningful incentives to reinvest in agricultural operations.”
The report notes that making the 20% QBI deduction permanent will benefit nearly all farms organized as pass-through entities, such as sole proprietorships, partnerships, and S corporations. The return of full bonus depreciation further supports equipment investment, especially for producers seeking to modernize aging machinery.
Meanwhile, the boost to the estate tax exemption, now $15 million per person, indexed for inflation, helps preserve multigenerational farm ownership without triggering costly estate taxes.
“Farmers are deeply affected by tax law changes,” Keller added. “The OBBB offers long-term planning stability, which is vital not just for families, but for the broader agricultural economy.”
For more information, contact: Andrew Keller at andrew.keller@ndsu.edu.