Agricultural Loan Exemption – How Lenders Can Move on New OBBB Provision

The One Big Beautiful Bill Act (OBBB) has introduced a new agricultural loan exemption to provide meaningful tax relief on rural or agricultural property loans. This could possibly lead to lower interest rates for qualifying loans. Both borrowers and lenders will need to consider how this provision will affect the context of lending negotiations.

Brad Stumpe, Audit and Assurance partner and Compliance and Review Practice Leader joined Brent McClure, Tax partner and leader of the Business Transition Planning and Banking and Financial Institution Tax practice, and tax senior manager Rebekah Tucker, to  discuss the impact this OBBB provision will have on the lending community during the Anders Everything Banks Need to Know About the One Big Beautiful Bill webinar. Other OBBB topics in the webinar include:

You can find more key tax and financial planning considerations for the OBBB here.

Agricultural Loan Exemption

Introduced by the OBBB, the Agricultural Loan Exemptions allows banks, regulated insurance companies and similar lending institutions to exclude 25% of the interest income earned on new loans secured by qualifying rural or agricultural real property from federal income tax.

Key Details of the Exemption

  • Eligible Loans – The 25% exclusion only applies to newly originated loans secured by qualifying rural or agricultural property. Refinanced loans issued before the OBBB’s enactment aren’t eligible.  The borrower must be a U.S. based entity or individual.
  • Eligible Property Use – To qualify, the property securing the loan must be used for:
    • The production of one or more agricultural products
    • The trade or business of fishing or seafood processing
    • An aquaculture facility
    • No mixed use – the property must be substantially used for agricultural purposes
  • Eligible Period – The exclusion applies to taxable years ending after the date of enactment (July 4, 2025) and before January 1, 2029.

Working with a knowledgeable advisor can help your organization navigate conversations with potential borrowers, especially as legislation continues to evolve.

Anders Banking and Financial Institutions advisors partner with banks and financial institutions to stay ahead of regulatory changes and make strategic, data-driven decisions. Request a meeting with an Anders advisor below to discuss how your institution can adjust to new OBBB provisions.

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