IRS offers tax break to lenders for farm loans

The Internal Revenue Service and the Treasury Department released interim guidance Thursday giving new tax benefits to banks and other lenders that provide loans secured by rural or agricultural real property.

In Notice 2025-71, the IRS and the Treasury provided interim guidance on a provision of the One Big Beautiful Bill Act that lets certain lenders exclude from gross income 25% of the interest they receive from loans on such property. Lenders can rely on the interim guidance until the Treasury and the IRS come out with proposed regulations.

The OBBBA added Section 139L to the Tax Code, providing the lucrative tax break to lenders. The interim guidance in the notice defines key terms from Section 139L, sets standards for deciding whether a loan is secured by rural or agricultural property, and includes rules for refinancings.

The IRS and the Treasury are accepting comments on the notice as they work on drafting the upcoming proposed regulations. Comments can be sent to www.regulations.gov (type IRS-2025-0400 in the search field) or by mail, to Internal Revenue Service, CC:PA:01:PR (Notice 2025-71) Room 5503, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.