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Home Ag Banking

ABA offers recommendations for implementation of new ag lender tax benefit

January 20, 2026
Reading Time: 1 min read
Banking agencies release CRA data on small-business, small-farm lending in 2023

The American Bankers Association today offered several recommendations for how the IRS should implement a new tax benefit for lenders serving rural and agricultural communities, which was included in a tax package passed by Congress last year.

The One Big Beautiful Bill Act included language allowing banks to exclude from gross income 25% of the interest they receive from loans secured by rural or agricultural real property. The provision was originally part of the Access to Credit for our Rural Economy Act, or ACRE Act. The IRS late last year released interim guidance on the new benefit ahead of rulemaking to implement it. (The provision is found in Section 139L of the Internal Revenue Code.)

Among its recommendations, ABA said that to expand options for farmers and ranchers, the IRS should maintain a broad, practical definition of agricultural real property and related structures that is consistent with existing tax rules and congressional intent. ABA urged the agency to avoid narrow or mechanical eligibility tests that would fail to reflect the diversity of agricultural operations and could discourage participation. It also urged the agency to align key eligibility concepts with the Farm Credit system where appropriate, “so that similarly situated agricultural borrowers are treated consistently.”

“Banks are key partners and provide agricultural credit nationwide and serve farmers, ranchers, cooperatives, and rural communities of all sizes,” ABA said. “They will be central to the success of Section 139L.”

Tags: ABA newsACRECommercial lendingConsumer lendingFarm bankingIRS
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