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Tax policy and farm organization

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  • McDonald, Tia M.
  • Lacy, Katherine

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.

Suggested Citation

  • McDonald, Tia M. & Lacy, Katherine, 2025. "Tax policy and farm organization," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 361142, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea25:361142
    DOI: 10.22004/ag.econ.361142
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