The American Bankers Association is celebrating a long-sought win with the passage of the ACRE Act. It stands for the Access to Credit for our Rural Economy Act. It provides tax relief to banks that have agriculture in their lending portfolios. In turn, ACRE allows banks to lower interest rates on farm real estate loans for rural customers.
Passed in the One Big Beautiful Bill, the ACRE Act secured a 25 percent tax benefit for banks when they issue farm real estate loans. ABA Senior Vice President of Agriculture and Rural Banking Policy Ed Elfmann says it’s been a goal for three decades.
“We’ve been working on it in different ways, shapes, and forms for about 30 years,” Elfmann tells Mid-West Farm Report. “We ended up with a 25 percent benefit. For a bank, when they do a farm real estate loan, they can take a 25 percent tax break on the income they earn from interest and then pass that through as interest savings to farmers.”
The ACRE Act aims to benefit producers by reducing input costs.
“If you’re buying farm real estate and not refinancing, but buying new farm real estate, your loan is going to qualify for ACRE, which means you should get a lower interest rate than you would have had a year ago, for example,” Elfmann explains.
The legislation also encourages farmland to remain in agricultural use. This makes it a potential tool to help the next generation of farmers acquire land. For banks, the tax break offers a competitive edge, helping them attract new customers and compete with other lenders.
While the act is a new federal law and nothing is required at the state level to implement it, banks in Kansas and Nebraska were the first to take advantage. Elfmann believes this is because those states already had a similar version of ACRE in place, making the mechanics familiar. Wisconsin is a part of that group, and he expects the Badger State to confidently implement the program as land starts to change hands after the harvest.
Moving forward, ABA will continue to advocate for a full 100 percent ACRE benefit to further lower interest rates for producers. Elfmann advises producers to talk with their ag lender about how to benefit.
