USDA Adjusted Gross Income Limits for Farm Program Eligibility

The USDA’s adjusted gross income limit for farm program eligibility is $900,000, measured as a rolling three-year average. A single dollar over that line makes a producer ineligible for the full program year across commodity, disaster, and conservation programs alike. Producers who earn at least 75 percent of their income from farming can still qualify for certain excepted programs, and conservation contracts protecting environmentally sensitive land can be waived case by case.

How the Three-Year Average Is Calculated

Federal law defines “average adjusted gross income” as the average over the three taxable years preceding the most immediately preceding complete taxable year.¹ The USDA skips your most recent tax year and looks at the three years before it. For the 2026 program year, the agency averages your AGI from 2022, 2023, and 2024.²

The rolling window cuts both ways. A single high-income year from selling land or equipment won’t automatically knock you out if the other two years pull the average back under $900,000. One lean year won’t save you either.

Add the AGI from all three applicable tax years (including any losses) and divide by three. The figure you use is the adjusted gross income line from your federal return, not gross revenue and not net farm income from Schedule F alone.

What Counts as Farm Income

This distinction matters most for producers over $900,000 who want to use the 75 percent exception. The USDA defines farm income broadly: crop and livestock sales, crop insurance payments, farm-based renewable energy revenue, rental income from farmland or equipment, and the sale of land that was used for agricultural purposes.³ Payments received under federal farm programs count as farm income too.

Everything else is non-farm income, calculated by subtracting your farm AGI from your total AGI.³ Off-farm wages, investment returns, rental income from non-agricultural property, and unrelated business income all land on the non-farm side.

One wrinkle: wages or dividends from a closely held corporation or family entity can count as farm income, but only if the entity is “materially participating” in farming. More than 50 percent of the entity’s gross receipts each tax year must come from farming, ranching, or forestry, and a representative of the entity has to certify this on a separate form.⁴

The 75 Percent Farm Income Exception

Producers whose average AGI exceeds $900,000 are not automatically locked out of every program. If at least 75 percent of your average AGI comes from farming, ranching, or forestry, you can still receive certain excepted payments.¹

The exception is limited. Under the statute, it applies to dairy margin coverage payments, emergency assistance for livestock, honeybees, and farm-raised fish, and conservation program payments received on or after October 1, 2024.¹ Some ad hoc disaster programs have included it when Congress authorized them.² Standard commodity programs like Price Loss Coverage and Agricultural Risk Coverage do not. If your average AGI exceeds $900,000, you are ineligible for ARC and PLC regardless of how much of that income comes from farming.

To claim the exception, file Form CCC-942 with a certification from a licensed CPA or attorney confirming that at least 75 percent of your average AGI derives from qualifying agricultural operations.⁴ Total your farm income across the three applicable years, total your overall AGI across the same period, and divide. The result needs to be 75 percent or higher.

Which Programs the Cap Applies To

The $900,000 limit reaches production programs run by the Farm Service Agency and conservation programs run by the Natural Resources Conservation Service.⁵

Production-side programs subject to the cap include Price Loss Coverage, Agricultural Risk Coverage, marketing assistance loans, the Livestock Forage Disaster Program, the Livestock Indemnity Program, Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish, and other disaster recovery programs.⁵

Conservation-side programs subject to the same cap include the Conservation Reserve Program, Environmental Quality Incentives Program, Conservation Stewardship Program, Agricultural Conservation Easement Program, and Regional Conservation Partnership Program.⁶

Waiver for Environmentally Sensitive Land

The 2018 Farm Bill added a case-by-case waiver for conservation programs. If a producer’s participation would protect environmentally sensitive land of special significance, the USDA can waive the $900,000 AGI limit entirely for that conservation contract.⁶ It is not automatic. It requires an individual determination by the agency and applies only to conservation payments, not commodity or disaster programs.

Payment Limits Are a Separate Cap

Don’t confuse the AGI eligibility threshold with payment limitations. Even if your income falls below $900,000, separate per-person caps restrict how much you can actually receive. For covered commodities (other than peanuts) and for peanuts, the payment limit is $155,000 each per person per crop year, with annual inflation adjustments beginning with the 2025 crop year.⁷ You have to clear both hurdles.

How Business Structure Changes the Calculation

For individuals, the number comes straight from your personal federal return. Married couples who file jointly get a useful provision: the USDA allows AGI to be allocated as though each spouse filed separately.¹ If one spouse earns most of the household income from a non-farming career, that allocation can keep the farming spouse’s share under the threshold.

Legal entities like corporations and LLCs are evaluated at the entity level, but the USDA looks through the ownership chain down to the fourth level to check each individual owner. If an individual member exceeds $900,000, the entity’s payment is reduced proportionally based on that member’s ownership share rather than eliminated.⁸

Joint ventures and general partnerships work differently. The AGI limit applies to each member separately. If one partner exceeds the cap, the partnership’s payment is reduced by that partner’s share, and the other partners are unaffected.

Producers who are not U.S. citizens or lawful permanent residents face additional requirements beyond the AGI limit. A foreign person must make a significant contribution of active personal labor, capital, and land. A foreign entity, defined as one where more than 10 percent of the beneficial interest is held by non-citizens, must have each foreign member contribute active personal labor.⁹

Filing Form CCC-941

Every producer who wants payments from a covered program must file Form CCC-941 (Average Adjusted Gross Income Certification and Consent to Disclosure of Tax Information) annually.⁵ Skipping it is not a minor oversight. Failure to file results in a determination of ineligibility for that program year.¹⁰

The form asks for your legal name, mailing address, and taxpayer identification number. You certify whether your three-year average AGI is at or below $900,000 or above it.¹¹ A consent section authorizes the IRS to share limited tax information with the USDA for verification.

One deadline catches people: the signed form must reach your local FSA office within 90 days of the date you signed it, or the consent becomes invalid.¹⁰ Don’t sign months before you plan to submit it. Have your previous three years of tax returns on hand when you fill it out.

Submit the form to the FSA county office where your farm records are maintained. After submission, the agency runs an automated check against IRS records. If the data matches and you’re under the limit, you are marked compliant. If the system flags a discrepancy, you may be asked for additional tax documentation or a third-party verification.

When You Need a CPA or Attorney Certification

When the automated IRS check raises questions, or when you need to demonstrate the 75 percent farm income exception, a certification from a licensed CPA or attorney can resolve the issue. Enrolled agents are not accepted for this purpose.¹²

The certification must include the professional’s state license number, the reason for the certification, relevant tax return details covering the three-year period, and, if the raw tax numbers appear to put the producer over the limit, a detailed reconciliation explaining why the AGI still qualifies.¹² The professional must acknowledge familiarity with 7 CFR Part 1400 and understand that a false certification can carry sanctions, including criminal penalties. The USDA can still follow up with the IRS after receiving a third-party certification.

What Happens If You Exceed the Limit

Exceeding the $900,000 average AGI makes a producer ineligible for all covered program benefits for that program year.⁸ There is no partial reduction for individuals. You are either under the cap or out for the year.

For legal entities the outcome is different. If one member exceeds the threshold, the entity’s payment is reduced by that member’s ownership interest rather than eliminated.⁸ A partnership where one of four equal partners exceeds the AGI cap loses 25 percent of its payment, not all of it.

If the USDA determines after the fact that a producer received payments while ineligible, the agency requires full repayment. Deliberate misrepresentation carries the risk of exclusion from future programs and potential criminal liability for false statements to a federal agency.

Appealing an Adverse AGI Determination

If your local FSA office finds you ineligible based on AGI, the decision is not final. The first step is an informal review by the county or area committee that issued the determination, which is a mandatory prerequisite to further review.¹³

After the informal review, you can request further review by the state FSA committee or appeal directly to the USDA’s National Appeals Division. A written appeal to NAD must be received within 30 calendar days of the date you receive the adverse decision, and it must include a signed statement explaining why the determination is wrong along with a copy of the decision itself.¹⁴

Mediation is also available. Requesting mediation before filing pauses the 30-day appeal clock; if mediation doesn’t resolve the dispute, you get the remaining balance of that period to file.¹⁴ Appeal is worth pursuing when a legitimate dispute exists about how income was calculated or categorized. It won’t rescue a producer who clearly exceeds the cap.

1
Office of the Law Revision Counsel. 7 U.S. Code 1308-3a – Adjusted Gross Income Limitation
2
Farm Service Agency. Payment Limitation, Payment Eligibility, and Average Adjusted Gross Income
3
Farm Service Agency. Average Adjusted Gross Income
4
U.S. Department of Agriculture. CCC-942 Certification of Income from Farming, Ranching, and Forestry Operations
5
Farm Service Agency. Adjusted Gross Income
6
Farm Service Agency. Average Adjusted Gross Income Certification and Verification
7
Office of the Law Revision Counsel. 7 U.S. Code 1308 – Payment Limitations
8
eCFR. 7 CFR Part 1400 – Payment Limitation and Payment Eligibility
9
Farm Service Agency. Foreign Persons
10
U.S. Department of Agriculture. CCC-941 Average Adjusted Gross Income Certification and Consent to Disclosure of Tax Information
11
U.S. Department of Agriculture. CCC-941 Average Adjusted Gross Income Certification and Consent to Disclosure of Tax Information
12
Farm Service Agency. Instructions, Terms and Conditions for CPA or Attorney Certification Statement
13
eCFR. 7 CFR 11.5 – Informal Review of Adverse Decisions
14
USDA National Appeals Division. A Guide to the National Appeals Division