Farmers and cooperatives across the country are seeing some long-awaited tax clarity thanks to a key provision in the recently passed federal tax legislation. Chuck Spencer, Executive Director of Corporate and Government Relations at GROWMARK, says Section 199A for agricultural cooperatives, originally set to expire at the end of 2025, has now been made permanent. The move builds on the 2017 Tax Cuts and Jobs Act, which lowered the corporate tax rate to 21% but left some pass-through entities and co-op tax treatment set to sunset without congressional action.
AUDIO: FEATURED CONVERSATION WITH GROWMARK’S CHUCK SPENCER:
Spencer says the origins of this tax benefit go back to 2004, when Senator Chuck Grassley first proposed a deduction for domestic production activities. It was later adapted to include agriculture, recognizing that farmers and their cooperatives are integral to domestic production. The recent action cements this recognition in the tax code and ensures continued parity with corporate rates. According to the National Council of Farmer Cooperatives, the value of this provision to farmers exceeds $2 billion annually.
Beyond the numbers, Spencer says this marks a rare and important moment for the ag industry to pause and celebrate. “This is a large benefit to farmers,” he says, noting that co-op boards—run by farmers themselves—now have more certainty when planning patronage dividends or reinvestments. He adds that while tax relief doesn’t offset all challenges, it does help amid rising input costs, firm land values, and low commodity prices.
Still, Spencer says the celebration should be brief. He points out that farmers are facing tight margins, soft markets, and continued inflation in operating expenses. While this legislative win deserves applause, the focus must quickly return to the broader challenges ahead.
