The FARM Act of 2025 would amend the Internal Revenue Code to deny the energy credit for solar energy property and for wind energy property when these facilities are placed in service by a public utility on agricultural land. It defines agricultural land by reference to the eligible land term in the Food Security Act of 1985 and defines public utility by reference to the existing provision in the tax code.
The bill also aligns the wind credit provisions with the solar credit in denying the credit for electricity produced by solar or wind facilities on agricultural land. The amendments apply to property placed in service after enactment.
At a Glance
What It Does
Adds new provisions to deny the Section 48 solar credit for equipment placed in service by a public utility on agricultural land and mirrors the wind credit denial in Section 45(e)(6). The bill also integrates key definitions for agricultural land and public utility.
Who It Affects
Public utilities deploying solar or wind facilities on agricultural land, and energy project developers considering projects on such land.
Why It Matters
Alters the economics of renewable projects sited on farmland, potentially shifting investment away from agricultural sites and reducing federal energy credit outlays on these projects.
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What This Bill Actually Does
The bill targets federal energy incentives for solar and wind projects located on agricultural land when a public utility is behind the project. Specifically, it adds a new subsection to the solar credit (Section 48) to deny the credit for equipment placed in service on agricultural land by a public utility.
It also expands the wind credit (Section 45) to deny the credit for electricity produced by solar or wind facilities on agricultural land, again when the project is placed in service by a public utility. In both cases, the bill uses defined terms for agricultural land (as defined by the Food Security Act) and for public utility (as defined by current tax rules).
The effective date clause makes these restrictions apply to property placed in service after enactment. The net effect is to tighten federal support for renewable projects on farmland, reshaping project economics and investment planning for developers and utilities.
The Five Things You Need to Know
The bill denies the 48 energy credit for solar energy property placed in service by a public utility on agricultural land.
The wind energy credit under 45(e)(6) is amended to deny credit for electricity from solar or wind facilities on agricultural land.
Agricultural land is defined by the ‘eligible land’ concept in the Food Security Act of 1985.
Public utility has the meaning given in section 136(c)(2) for purposes of these denials.
The amendments apply to property placed in service after enactment, with no explicit grandfathering for pre-enactment projects.
Section-by-Section Breakdown
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Short Title
This section designates the act as the Future Agriculture Retention and Management Act of 2025 (the FARM Act of 2025). It serves to provide a formal name for the statute and frames where the enacted provisions will be codified.
Denial of credit for solar energy property on agricultural land
Adds new subsection 48(f) to deny the general energy credit for solar properties placed in service by a public utility on agricultural land. It defines agricultural land by reference to eligible land in the Food Security Act of 1985 and defines public utility by reference to the existing statutory definition. A conforming amendment to 48(a)(1) ensures the denial is integrated into the overall credit framework.
Denial of credit for wind energy property on agricultural land
Adds or rewrites Section 45(e)(6) so that the energy credit for electricity produced by solar or wind facilities placed on agricultural land by a public utility is denied. It uses the same agricultural land and public utility definitions as in the solar provision to ensure consistency across technology types.
Effective date
Provides that the amendments apply to property placed in service after the date of enactment. This creates a clean breakpoint between pre-enactment and post-enactment projects and raises questions about any ongoing or in-progress developments.
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Explore Energy in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- U.S. Treasury and federal taxpayers: reduced outlays on energy credits designed for solar and wind projects located on agricultural land (less subsidy leakage).
- Budget policy analysts and lawmakers: a clearer, more budget-constrained energy credit landscape that may simplify scoring and policy design.
- Rural land-preservation advocates and farmland-focused groups: potential reduction in energy project encroachment on farmland, supporting land-use goals.
Who Bears the Cost
- Public utilities proposing solar or wind projects on agricultural land lose access to the energy credits for those projects.
- Renewable energy developers who planned or financed ag-land sites may face higher project costs or reduced returns due to the credit denial.
- Tax equity investors and financing partners relying on these specific credits experience lower tax benefits or altered investment structures.
- Agricultural landowners hosting such facilities may face reduced hosting opportunities or revenue streams tied to credits, potentially affecting land-use economics.
Key Issues
The Core Tension
The central dilemma is whether to prioritize farmland preservation and budgetary restraint by restricting a key renewable energy subsidy on agricultural land, or to preserve flexible incentives for deployment of solar and wind technologies on farmland to accelerate energy transition and grid reliability.
The bill introduces a policy shift that tightens federal support for renewable projects sited on agricultural land. While this may advance farmland preservation and reduce subsidy outlays, it also raises questions about how projects will compete for capital if tax incentives specific to ag-land sites are removed.
The definitions deployed—the agricultural land standard from the Food Security Act of 1985 and the public utility standard from existing tax law—could interact with other energy credits and state programs in complex ways. The absence of explicit grandfathering for projects already under development or finance plans at enactment creates potential near-term uncertainty for developers and landowners alike.
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