Tax policy and farm organization

Tia M. McDonald and Katherine Lacy

No 361142, 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO from Agricultural and Applied Economics Association

Abstract: The Tax Cuts and Jobs Act (TCJA) introduced substantial changes to the tax code, affecting farm households’ organizational choices. This study examines farm responses to the TCJA along both the extensive and intensive margins, focusing on reorganization decisions and labor expense adjustments. Using a logit regression, we analyze the likelihood of organizational structure selection for tax purposes in response to the TCJA and the provisions of the Qualified Business Income Deduction (QBID). We find an increased likelihood of organizing as an S corporation after the TCJA took effect. Furthermore, using a fuzzy regression discontinuity design, we demonstrate a significant increase in wage expenses in response to QBID income limits.

Keywords: Farm; Management (search for similar items in EconPapers)
Pages: 24
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea25:361142

DOI: 10.22004/ag.econ.361142

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