# Plain Language Summary: ECORA Act of 2021

This bill creates a tax break for banks and financial institutions that lend money to farmers and rural homeowners. Specifically, it says that banks don't have to pay federal income taxes on the interest they earn from loans used to buy or improve agricultural land or rural homes. Right now, banks have to count all interest income as taxable income. This bill would let them exclude interest from agricultural loans from their taxable income, which effectively reduces the taxes they owe.

The tax break only applies to certain types of lenders—mainly FDIC-insured banks and savings associations, plus some subsidiaries of bank holding companies. The loans have to be secured by actual farmland or by rural single-family homes in areas with populations of 2,500 or less that aren't part of a major city. For rural homes specifically, the loan must be used to purchase or improve the house, and it has to be the owner's primary residence.

The practical effect is that this bill aims to make it cheaper for banks to lend money to farmers and rural homeowners by reducing the banks' tax burden on those loans. The theory is that lower costs for banks could translate into better loan terms or easier access to credit for farmers and rural residents. However, the tax break goes to the banks themselves, not directly to the borrowers, so whether farmers and homeowners actually see lower interest rates or better terms would depend on how much banks choose to pass along these savings.

ECORA Act of 2021

Kind, Ron

Enhancing Credit Opportunities in Rural America Act of 2021 or the ECORA Act of 2021 This bill modifies the requirements for calculating taxable income to exclude from gross income interest received by a lender from real estate loans secured by agricultural real estate or by a leasehold mortgage (with a status as a lien) on agricultural real estate. Agricultural real estate includes real property that is substantially used for the production of one or more agricultural products. It also includes any single family residence that is (1) the principal residence of its occupant, (2) located in a rural area which is not within a Metropolitan Statistical Area and has a population of 2,500 or less, and (3) is purchased or improved with the proceeds of a loan secured by agricultural real estate or by a household mortgage.