Legislative and Policy Analysis
Section 10308: Adjusted gross income limitation
Executive Summary
Section 10308 changes the adjusted gross income rules for certain USDA farm program benefits. It does not create a new appropriation, grant program, tax credit, loan authority, or direct funding line. Instead, it creates an exception to the existing $900,000 average adjusted gross income limitation for certain disaster assistance and conservation payments when at least 75 percent of a person’s or legal entity’s average gross income comes from farming, ranching, or silviculture activities.[1]
In practical terms, Section 10308 allows some higher-income farm, ranch, forestry, specialty crop, and diversified agricultural operations to remain eligible for specified USDA benefits that otherwise could be blocked by the $900,000 AGI cap. The provision is especially relevant for operations with high gross receipts but large expenses, such as specialty crop farms, livestock operations, vertically integrated farms, diversified family farm businesses, and farms with direct-to-consumer or agritourism income.
The section also expands the meaning of farming, ranching, or silviculture activities to include agritourism, direct-to-consumer marketing of agricultural products, sales of agricultural equipment owned by the person or legal entity, and other agriculture-related activities determined by USDA.[2]
What Section 10308 Actually Does
Section 10308 amends Section 1001D(b) of the Food Security Act of 1985, codified at 7 U.S.C. 1308-3a(b). Current law generally bars a person or legal entity from receiving covered commodity and conservation program benefits if that person or entity has average adjusted gross income above $900,000.[3]
Section 10308 adds a new exception for certain operations. For an “excepted payment or benefit,” the $900,000 AGI limitation does not apply if at least 75 percent of the person’s or legal entity’s average gross income comes from farming, ranching, or silviculture activities.[4]
The section identifies the covered “excepted payment or benefit” categories as:
| Program or activity | Amount | What the provision supports |
|---|---|---|
| Supplemental agricultural disaster assistance under subtitle E of title I of the Agricultural Act of 2014 | No new specific dollar amount in Section 10308 | Allows otherwise AGI-limited producers to qualify for covered disaster assistance if they meet the 75 percent farming, ranching, or silviculture income test.[5] |
| Noninsured Crop Disaster Assistance Program under 7 U.S.C. 7333 | No new specific dollar amount in Section 10308 | Allows qualifying higher-AGI producers of noninsured crops to remain eligible for specified NAP benefits if the farm-income test is met.[6] |
| Covered conservation payments or benefits described in 7 U.S.C. 1308-3a(b)(2)(C), received on or after October 1, 2024 | No new specific dollar amount in Section 10308 | Allows qualifying higher-AGI producers to receive covered conservation benefits when the 75 percent income test is satisfied.[7] |
The most important quantified thresholds in Section 10308 are not appropriations. They are eligibility thresholds:
| Threshold | Meaning |
|---|---|
| $900,000 average AGI limitation | The general statutory income cap for many USDA commodity and conservation program benefits. |
| 75 percent average gross income test | The new exception threshold for certain disaster and conservation payments or benefits. |
| October 1, 2024 | Date after which covered conservation payments or benefits described in the AGI statute may qualify as excepted payments or benefits. |
Because this is an eligibility expansion rather than a standalone funding line, the budget effect would occur through increased access to already authorized USDA payment pathways. CBO’s broader estimate for Public Law 119-21 identifies major federal budget effects across the law, but Section 10308 is not a cleanly separable public line item in ordinary award-level datasets.[8]
Legislative Mechanism
Section 10308 works by cross-reference and exception. It does not rewrite every affected USDA program. Instead, it amends the AGI eligibility statute that sits upstream of many USDA payment decisions.
The mechanism has four parts.
First, it changes the existing AGI limitation rule so the $900,000 cap is subject not only to the existing special-significance conservation waiver but also to the new exception for certain operations.[9]
Second, it defines “excepted payment or benefit” to include supplemental agricultural disaster assistance, Noninsured Crop Disaster Assistance Program benefits, and certain conservation payments or benefits received on or after October 1, 2024.[10]
Third, it broadens the covered income concept by defining “farming, ranching, or silviculture activities” to include agritourism, direct-to-consumer marketing of agricultural products, sale of agricultural equipment owned by the person or entity, and other agriculture-related activities determined by USDA.[11]
Fourth, it leaves USDA to administer the exception through Farm Service Agency and Natural Resources Conservation Service eligibility systems. USDA’s implementation materials explain that participants subject to AGI rules must certify eligibility, that IRS consent is used for AGI verification, and that participants seeking the 75 percent exception use certification procedures such as CCC-943.[12]
Expenditure Tracking and Reporting Protocol
Section 10308 affects federal financial flows indirectly. It does not appropriate a separate pool of money. It changes who can qualify for certain USDA payments and benefits. As a result, the spending pathway is likely to be tracked through the existing accounts and systems for the underlying USDA programs rather than through a Section 10308-specific public account.
Likely tracking sources include USDA Farm Service Agency program records, Natural Resources Conservation Service program records for covered conservation benefits, Commodity Credit Corporation budget execution where applicable, Treasury outlay reporting, OMB apportionment materials, USDA financial reporting, USAspending.gov where award-level reporting exists, and oversight by USDA’s Inspector General, GAO, and Congress.
Public tracking is likely to be partly visible but difficult to isolate. The underlying payments may be visible in USDA program data or USAspending.gov when reportable, but the public may not be able to distinguish payments made only because Section 10308 waived the AGI limitation from payments made to producers already below the $900,000 AGI cap.
flowchart TD
A[Statutory AGI exception] --> B[USDA eligibility rules]
B --> C[FSA and NRCS records]
C --> D{Payment type}
D --> E[Disaster assistance]
D --> F[NAP benefits]
D --> G[Conservation benefits]
E --> H[Program payment systems]
F --> H
G --> H
H --> I[CCC and USDA budget execution]
I --> J[Treasury outlay reporting]
I --> K[OMB apportionment]
I --> L[USDA financial reports]
H --> M[USAspending where visible]
J --> N[Oversight and public reporting]
K --> N
L --> N
M --> N
N --> O[Visibility partly aggregated]
The reporting protocol will likely operate as follows:
| Reporting layer | Likely protocol |
|---|---|
| Producer or entity certification | Producer or legal entity submits AGI and farm-income certifications to USDA, often through FSA forms and tax professional verification. |
| USDA eligibility review | FSA or NRCS applies AGI, ownership, attribution, and program eligibility rules before approving payment or benefit eligibility. |
| Budget execution | USDA and, where applicable, the Commodity Credit Corporation record obligations and outlays through normal budget execution channels. |
| Treasury and OMB | Outlays and apportionment controls are reflected in government-wide budget execution and account reporting. |
| Public reporting | Public data may show awards or program totals, but Section 10308-specific eligibility effects may not be separately labeled. |
| Oversight | USDA Inspector General, GAO, CBO, and congressional committees may review implementation, improper payments, eligibility controls, or budget effects. |
The main limitation is traceability. If a producer receives a disaster or conservation payment after qualifying under the 75 percent exception, the public payment record may not identify that Section 10308 was the reason the producer passed the AGI screen.
Day-to-Day Government Process Changes
For USDA, Section 10308 adds another eligibility pathway to program administration. FSA and NRCS offices must distinguish between applicants who are below the general $900,000 AGI cap and applicants who exceed that cap but qualify because at least 75 percent of average gross income comes from farming, ranching, or silviculture activities.
County offices and service centers will likely need to process more income-composition certifications, tax professional verification statements, and ownership or entity records. USDA’s 2026 implementation rule states that the $900,000 AGI limitation is waived beginning with program year 2026 when the person or legal entity meets the 75 percent farm-income test, the payment is an excepted payment, and acceptable certification is provided.[13]
For producers, the day-to-day change is paperwork and planning. Producers above the $900,000 average AGI threshold may need to document income sources across the relevant tax years, coordinate with a CPA, attorney, or enrolled agent, and file the required USDA certification materials before benefits can be approved.
For USDA compliance staff, the change increases the importance of audit trails. The agency must be able to verify not only AGI but also whether enough gross income is tied to qualifying farming, ranching, silviculture, agritourism, direct-to-consumer marketing, equipment sales, or other USDA-recognized agriculture-related activities.
Effects on Consumers
Section 10308 does not directly change retail food prices, SNAP benefits, grocery assistance, crop insurance premiums paid by consumers, or consumer-facing food safety rules.
The consumer effect is indirect. By allowing more high-gross-income agricultural operations to qualify for certain disaster and conservation benefits, the section may help some producers recover from disasters or participate in conservation programs. That can support continuity of production in sectors where farms may have high gross receipts but narrow margins, including specialty crops, livestock, and diversified operations.
The effect is not likely to be visible to consumers as a separate price change. Any consumer-level effect would be filtered through farm production, regional supply conditions, disaster recovery, and commodity or specialty crop markets.
Effects on Businesses
Section 10308 is most important for agricultural businesses with high gross receipts and substantial business expenses. A $900,000 AGI cap can affect different farm businesses differently depending on tax structure, ownership, commodity mix, and income volatility. The new exception may help operations whose income is overwhelmingly agricultural but whose average AGI exceeds the general cap.
Potentially affected businesses include:
| Business type | Likely effect |
|---|---|
| Specialty crop operations | May gain access to covered disaster or conservation benefits despite high gross income if the 75 percent test is met. |
| Livestock and ranching operations | May benefit when disaster programs are relevant and income is primarily from ranching or related activities. |
| Forestry and silviculture operations | May benefit where covered benefits apply and income is primarily from silviculture. |
| Agritourism and direct-market farms | May benefit from the broader statutory definition of farming, ranching, or silviculture activities. |
| Farm entities with complex ownership | May face more documentation, attribution, tax certification, and compliance work. |
| CPAs, attorneys, and enrolled agents | May see more demand for verification and certification services tied to USDA eligibility. |
The provision may also affect competitive dynamics. Producers below the AGI cap already had access to covered benefits if they met other eligibility rules. Section 10308 expands access for some larger or more commercially complex operations, which could shift some disaster or conservation support toward farms with higher gross income but qualifying agricultural income composition.
Environmental and Climate Impact
Section 10308 has mixed environmental implications.
On the positive side, the exception applies to certain conservation payments or benefits. That may allow larger or higher-income agricultural operations to participate in conservation programs when they otherwise would be blocked by the AGI cap. Because large operations may control significant acreage, expanded eligibility could increase participation in conservation practices, habitat protection, soil health measures, water quality improvements, or other USDA conservation activities, depending on the program and implementation choices.
On the other hand, the section does not itself require additional conservation outcomes. It expands eligibility for certain benefits; it does not add new environmental performance standards, climate benchmarks, emissions requirements, or public reporting of environmental outcomes. If expanded eligibility primarily increases disaster payments without changing land management, the climate or environmental benefit may be limited.
The environmental effect therefore depends on which payments are most affected. If the main effect is more participation in conservation programs, environmental benefits may increase. If the main effect is broader access to disaster assistance, the environmental effect is more likely to be indirect and tied to recovery after droughts, floods, wildfires, or other weather-related events.
Impact Summary
Section 10308 is a targeted eligibility expansion for certain USDA disaster and conservation benefits. It keeps the general $900,000 average AGI limitation in place but creates a significant exception for operations that derive at least 75 percent of average gross income from farming, ranching, or silviculture activities.
The section is likely to matter most for higher-gross-income agricultural operations, specialty crop producers, diversified farms, agritourism operations, direct-market farms, ranchers, and forestry-related businesses. It does not create a new funding account, so its fiscal effects will be embedded in the spending patterns of the underlying USDA programs.
The strongest transparency concern is that public reporting may show the payment but not the reason the recipient qualified. Without USDA reporting that flags Section 10308-based eligibility, the public may have difficulty determining how much federal spending is attributable to this new exception.
Key References and Sourcing
| Source | Relevance |
|---|---|
| House Rules Committee PDF, H.R. 1 legislative text | Provides the text of Section 10308 and the statutory amendment creating the exception. |
| U.S. House Office of the Law Revision Counsel, 7 U.S.C. 1308-3a | Shows the codified AGI limitation, $900,000 cap, enforcement rule, and new exception. |
| USDA Farm Service Agency, Adjusted Gross Income | Explains USDA implementation, annual certification, IRS consent, CCC-941, CCC-943, and the 75 percent exception. |
| Federal Register, Payment Limitation and Payment Eligibility | Provides USDA’s 2026 implementing rule and definitions for farm, ranch, and silviculture income. |
| Congressional Budget Office, Estimated Budgetary Effects of Public Law 119-21 | Provides broader budget context for Public Law 119-21 and confirms that budget effects are estimated at the law-wide level. |
| Congressional Research Service via EveryCRSReport, Selected Horticultural Provisions in FY2025 Budget Reconciliation Legislation | Notes that Section 10308 may allow increased participation from some horticultural operations with average AGIs above $900,000. |
[1] U.S. House Office of the Law Revision Counsel, “7 U.S.C. 1308-3a: Adjusted gross income limitation,” https://uscode.house.gov/view.xhtml?edition=prelim&num=0&req=granuleid%3AUSC-prelim-title7-section1308-3a.
[2] House Rules Committee, “H.R. 1 legislative text,” Section 10308, https://rules.house.gov/sites/evo-subsites/rules.house.gov/files/evo-media-document/file_8654.pdf.
[3] U.S. House Office of the Law Revision Counsel, “7 U.S.C. 1308-3a: Adjusted gross income limitation,” statutory $900,000 AGI limitation, https://uscode.house.gov/view.xhtml?edition=prelim&num=0&req=granuleid%3AUSC-prelim-title7-section1308-3a.
[4] U.S. House Office of the Law Revision Counsel, “7 U.S.C. 1308-3a(b)(4): Exception for certain operations,” https://uscode.house.gov/view.xhtml?edition=prelim&num=0&req=granuleid%3AUSC-prelim-title7-section1308-3a.
[5] U.S. House Office of the Law Revision Counsel, “7 U.S.C. 9081: Supplemental agricultural disaster assistance,” https://uscode.house.gov/view.xhtml?req=%28title%3A7+section%3A9081+edition%3Aprelim%29.
[6] Legal Information Institute, “7 U.S. Code § 7333: Noninsured Crop Disaster Assistance Program,” https://www.law.cornell.edu/uscode/text/7/7333.
[7] U.S. House Office of the Law Revision Counsel, “7 U.S.C. 1308-3a(b)(2)(C) and (b)(4),” https://uscode.house.gov/view.xhtml?edition=prelim&num=0&req=granuleid%3AUSC-prelim-title7-section1308-3a.
[8] Congressional Budget Office, “Estimated Budgetary Effects of Public Law 119-21,” July 21, 2025, https://www.cbo.gov/publication/61570.
[9] House Rules Committee, “H.R. 1 legislative text,” Section 10308 amendment to Section 1001D(b)(1), https://rules.house.gov/sites/evo-subsites/rules.house.gov/files/evo-media-document/file_8654.pdf.
[10] House Rules Committee, “H.R. 1 legislative text,” Section 10308 definition of “excepted payment or benefit,” https://rules.house.gov/sites/evo-subsites/rules.house.gov/files/evo-media-document/file_8654.pdf.
[11] House Rules Committee, “H.R. 1 legislative text,” Section 10308 definition of “farming, ranching, or silviculture activities,” https://rules.house.gov/sites/evo-subsites/rules.house.gov/files/evo-media-document/file_8654.pdf.
[12] USDA Farm Service Agency, “Adjusted Gross Income,” https://www.fsa.usda.gov/tools/informational/payment-eligibility/adjusted-gross-income.
[13] Federal Register, “Payment Limitation and Payment Eligibility,” June 2, 2026, https://www.federalregister.gov/documents/2026/06/02/2026-11002/payment-limitation-and-payment-eligibility.
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