FACT SHEET

UNITED STATES DEPARTMENT OF AGRICULTURE

FARM SERVICE AGENCY

Page 1

March 2009

Average Adjusted Gross Income 2009 and Subsequent Crop Years 

Overview 

In accordance with the Food, 

Conservation, and Energy 

Act of 2008 (2008 Act), the 

United States Department 

of Agriculture (USDA) 

has begun implementing 

average Adjusted Gross 

Income (AGI) changes for 

program eligibility for the 

2009 through 2012 program 

years. The 2008 Act provides 

authority for implementing 

the average AGI provisions 

applicable to Commodity 

Credit Corporation (CCC) 

programs administered by 

the Farm Service Agency 

(FSA) and Natural Resources 

Conservation Service (NRCS).

Applicability 

All persons and legal entities 

requesting certain program 

payments, either directly 

or indirectly, are subject to 

average AGI provisions. 

Persons or legal entities whose 

average AGI for the three 

taxable years preceding the 

most immediately preceding 

complete taxable year exceeds 

the qualifying limits are 

ineligible for the applicable 

payment. If the payments are 

issued to an entity, general 

partnership or a joint venture, 

payments are reduced in an 

amount that is commensurate 

with the direct and indirect 

interest of any member or 

interest holder who is noncompliant with average AGI.

Certifications 

Participants in CCC programs 

subject to average AGI 

rules must annually certify 

their eligibility to receive 

benefits by either submitting 

a statement from a certified 

public accountant or an 

attorney, or by completing 

form CCC-926. This form 

may be obtained from local 

FSA and NRCS offices or 

online at: http://forms.sc.egov.

usda.gov/eforms/mainservlet. 

Definitions

Adjusted Gross Income: 

AGI is the legal entity’s or 

individual’s IRS-reported 

adjusted gross income, or 

a comparable measure as 

determined by CCC.

Adjusted Gross Farm Income: 

Income from activities related 

to farming, ranching or 

forestry is considered adjusted 

gross farm income. (See Table 

1). 

Adjusted Gross Nonfarm 

Income: The difference 

between adjusted gross 

income and adjusted gross 

farm income is considered 

the adjusted gross nonfarm 

income.

Legal Entity: The term 

“legal entity” includes a 

corporation, joint stock 

company, association, limited 

partnership, charitable 

organization, or similar entity, 

including any such entity or 

organization participating 

in the operation as a partner 

in a general partnership, a 

participant in a joint venture, 

a grantor in a revocable trust, 

or as a participant in a similar 

entity, including joint ventures 

and general partnerships.

Program Year: As determined 

by CCC, the program year is 

the relevant year for which 

a specific benefit is made 

available. 

Changes to Average AGI 

Rules for 2009

Major changes made to 

average AGI rules beginning 

with the 2009 program year 

include:

• Different AGI limitations 

for different programs

• Base period for 

determining average AGI

• Annual certification

• Tracking of AGI through 

entity ownership

• Definition of farm income

Multiple AGI Limitations 

Different income thresholds 

will be used to determine 

eligibility for different CCC 

programs as described in Table 

2.

A person or legal entity with:

• Adjusted Gross Nonfarm 

Income exceeding 

$500,000 is ineligible for 
FACT SHEET

Average AGI 2009 and Subsequent Years March 2009

all commodity program 

payments and benefits

• Adjusted Gross Farm 

Income exceeding $750,000 

is ineligible for Direct and 

Counter-cyclical Program 

(DCP) Direct Payments

• Adjusted Gross Nonfarm 

Income exceeding $1 

million is ineligible for 

conservation programs, 

unless at least 66.66% of 

total AGI was farm income. 

(Note: This limitation may 

be waived on a case-bycase basis for the protection 

of environmentally 

sensitive land of special 

significance.)

Base Period for Determining 

Average AGI 

A 3-year average AGI will 

be used to determine whether 

an individual or legal entity 

qualifies to receive program 

benefits subject to AGI rules. 

Base years for computing 

average AGI are:

Crop 

year:

AGI base years are:

2009 2005, 2006, 2007

2010 2006, 2007, 2008

2011 2007, 2008, 2009

2012 2008, 2009, 2010

Annual Certification 

Annual certifications of AGI 

compliance are required from 

each individual and legal entity 

requesting CCC payments 

either directly or indirectly. 

Annual certifications are 

made on form CCC-926, or 

by a statement from a certified 

public accountant or an 

attorney. 

Tracking of AGI Through 

Entity Ownership

If the participant is a general 

partnership or a joint venture, 

AGI certifications are required 

from each member who is an 

individual or entity, and from 

each embedded interest holder. 

If the participant is an entity, 

AGI certifications are required 

from the participating entity 

and from each interest holder 

who is an individual or entity 

and from each embedded 

interest holder. 

Compliance with AGI rules 

will be tracked through 

four levels of legal entity 

ownership. If individuals or 

entities within those four levels 

do not comply with average 

AGI provisions, payments 

will be reduced by an amount 

commensurate with the 

ineligible share. 

Definition of Farm Income

General farm income includes 

income derived from the 

production of crops and 

livestock, from ranching and 

forestry, and other income 

reported on Schedule F of the 

IRS tax forms. See Table 1 for 

more information. 

Additional information 

This fact sheet provides 

general guidelines only. Please 

contact your local USDA 

Service Center for further 

details and information on 

average AGI provisions. 

The U.S. Department of Agriculture 

(USDA) prohibits discrimination in 

all its programs and activities on the 

basis of race, color, national origin, 

age, disability, and where applicable, 

sex, marital status, familial status, 

parental status, religion, sexual orientation, genetic information, political 

beliefs, reprisal, or because all or part 

of an individual’s income is derived 

from any public assistance program. 

(Not all prohibited bases apply to all 

programs.) Persons with disabilities 

who require alternative means for 

communication of program information 

(Braille, large print, audiotape, etc.) 

should contact USDA’s TARGET Center at (202) 720-2600 (voice and TDD). 

To file a complaint of Discrimination, 

write to USDA, Director, Office of Civil 

Rights, 1400 Independence Avenue, 

SW., Washington, DC 20250-9410, or 

call (800) 795-3272 (voice) or (202) 

720-6382 (TDD). USDA is an equal 

opportunity provider and employer. 

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FACT SHEET

March 2009

Page 3

Average AGI 2009 and Subsequent Years

Table 1. Source of Adjusted Gross Farm Income.

INCOME RELATED TO LIVESTOCK AND CROPS OTHER TYPES OF INCOME

Production of livestock, including but not limited to:

•	 Cattle, sheep, goats, swine

•	 Elk, reindeer, bison, deer

•	 Horses

•	 Poultry

•	 Fish and other aquaculture products for food

•	 Honey bees

The sale of land that has been used in agriculture

The sale of, or sale of easements and development 

rights to:

•	 Farm land, ranch land, or forestry land

•	 Water or hunting rights

•	 Environmental benefits

The feeding, rearing, or finishing of livestock The rental or lease of land or equipment used for 

farming, ranching, or forestry operations, including 

water or hunting rights

Products produced by or derived from livestock

Any payment or benefit, including benefits from risk 

management practices, crop insurance indemnities, 

and catastrophic risk protection plans. Production of crops, specialty crops and unfinished 

raw forestry products

Payments and benefits authorized under any 

program made applicable to payment eligibility and 

payment limitation rules The processing, packing, storing, shedding and 

transporting of farm, ranch and forestry commodities, 

including renewable energy

Production of farm-based renewable energy

Any other activity related to farming, ranching or forestry as determined by the Deputy Administrator.

Any income reported on Schedule F of other schedule used by the person or legal entity to report income 

from farming, ranching, or forestry operations to the Internal Revenue Service.

In addition to all of the above, and specifically when the average adjusted gross farm income is at least 

66.66 percent of the average AGI:

•	 The sale of equipment to conduct farm, ranch, or forestry operations

•	 The provision of production inputs and services to farmers, ranchers, foresters and farming 

operations.

Table 2. Applicability of AGI Thresholds to Various CCC Programs

PROGRAM APPLICABLE AGI LIMITATION

Commodity and Disaster programs including,

DCP, ACRE, SURE, ELAP, LFP, LIP, TAP, 

NAP

The three-year average Nonfarm AGI shall not exceed 

$500,000.

DCP Direct Payments The three-year average Nonfarm AGI shall not exceed 

$500,000 and the three-year average Farm AGI shall not 

exceed $750,000. Price Support benefits including Market 

Gains, Loan Deficiency Payments, and 

MILC payments.

The three-year average Nonfarm AGI shall not exceed 

$500,000.

All Conservation Programs administered by 

FSA and NRCE including: CRP, AMA, AWEP, 

CSTP, CCPI, EQIP, FRPP, CRP, WRP, WHIP

The three-year average Nonfarm AGI shall not exceed 

$1 million, unless at least 66.66% of the total AGI was 

adjusted gross farm income.

Note: This limitation may be waived on a case-by 

–case basis for environmental sensitive land of special 

significance.

All other programs As determined by federal regulation for each program.