ICBA said it supports favorable provisions of IRS guidance regarding the ACRE tax exclusion for interest earned on agricultural real estate loans.
Details: In a letter to the IRS, ICBA:
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Said it is pleased that the guidance contains positive features that are consistent with ICBA’s recommendations to the Treasury Department and the IRS in advance of its publication.
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Suggested changes that would give Section 139L greater reach, maximize the tax benefit of the ACRE Act, and qualify more loans to assist American farmers and ranchers.
Background: The One Big Beautiful Bill Act added a section to the Internal Revenue Code that allows lenders to exclude from gross income 25% of the interest they receive from loans secured by rural or agricultural real property. This exclusion—based on the ACRE Act and long sought by ICBA—was enacted under Section 139L of the OBBBA.
About the Guidance: The IRS guidance—a precursor to a proposed rule from the agency—defines key terms, establishes standards for determining whether a loan is secured by rural or agricultural property, and provides rules regarding loans that refinance a prior loan but also include new money.
ICBA Advocacy: ICBA has repeatedly called on policymakers to take a broad interpretation of the legislation and ensure the exclusion applies to as many agricultural loans as possible.
Community Banker Grassroots: ICBA thanks the many community bankers who responded to ICBA’s grassroots campaign by submitting comment letters to the IRS.