Community bankers across the country are calling on the Treasury Department to fully implement a new tax provision that supports lending to farmers and ranchers.
The Independent Community Bankers of America (ICBA), along with its affiliated state associations including the Idaho Bankers Association submitted a joint letter urging the Treasury to adopt a broad interpretation of the recently enacted Access to Credit for our Rural Economies (ACRE) Act.
Background: About the ACRE Act
Passed as part of the One Big Beautiful Bill Act (OBBBA), the ACRE provisions create a 25% tax exclusion for interest earned on loans secured by agricultural land. This long-sought policy, which is now law, was championed by state banking associations and our national affiliates, ABA and ICBA, to strengthen access to credit in rural America.
Why Broad Implementation Matters
In their letter, ICBA and the state associations stressed that a narrow interpretation of Section 139L would limit the impact of the ACRE Act and shortchange the farmers, ranchers, and rural communities it was designed to benefit. Instead, the groups are advocating for Treasury to ensure the exclusion applies to as many types of agricultural loans as possible.
Examples of qualifying loans should include:
- Operating and equipment loans
- Loans where agricultural real estate serves as secondary collateral
- Loans partially secured by farmland
- Loans secured by rural land that includes a dwelling
- Loans for land improvements
- USDA-guaranteed loans
By applying the exclusion broadly, the Treasury can maximize the positive effects of the law for rural borrowers and the community banks that serve them.