PLC Payments – The Income Boost You May Not Be Expecting
By Kameron Schultz, CPA
It’s no secret that input costs are up and many farmers are concerned about how they’re going to cover their expenses this fall. One item that may be a timely boost to cash flow is the potential ARC/PLC payment. Last summer, the OBBA changed the reference price for PLC and increased the payment limit, so for this year only farmers will receive the higher of the ARC-CO or PLC payment for each covered commodity regardless of which program they signed up for back in Spring of 2025. While the final calculation will depend on the individual farm and county, we expect PLC to be the better of the two for wheat producers in our area.
The 2025 wheat PLC payment rate is $1.29 per bushel. The payment is based on your farm’s wheat base acres and PLC payment yield. For example, a farm with 1,500 wheat base acres and a 60-bushel PLC yield would have an estimated PLC payment of about $98,685 ($1.29 x 60bu x 1,500ac x 85%). The actual payment will depend on the information FSA has on file for your farm and whether the ARC-CO calculation happens to be higher.
One thing to keep in mind when looking at your FSA records is that the 2025 payment is based on your existing, or “old,” base acres. The additional base acres that FSA recently calculated under the new legislation are not part of the 2025 payment calculation. Those new acres will come into play beginning with the 2026 crop year.
From a tax-planning standpoint, a PLC payment of this size can make a noticeable difference in your 2025 income. Especially for those with an October or November fiscal year end, it is worth including a reasonable estimate when we look at your projected taxable income and estimated tax liability. It may also be helpful to consider the payment when deciding whether year-end purchases or other income and expense planning make sense for your operation. The goal isn’t necessarily to spend money just to reduce taxes, but rather to make those decisions knowing what your overall income picture is likely to look like.
The 2025 ARC/PLC payment limit has also increased to $155,000 per person or legal entity, subject to the applicable eligibility and attribution rules. Final 2025 payments are expected to be issued after October 1, 2026, so contact our office to get your planning appointment on the calendar.