# The ACRE Act: A Tax Break for Rural and Agricultural Lenders

This bill creates a new tax break for banks and financial institutions that lend money to farmers, ranchers, and rural homeowners. Specifically, it says that when these lenders receive interest payments on loans backed by agricultural land or rural property, they won't have to pay federal income tax on that interest income. Think of it as the government saying to banks: "If you're lending money to help rural America, we'll let you keep more of the interest you earn from those loans."

The bill applies to several types of loans. First, it covers any loan secured by farmland or other property used for agriculture. Second, it covers mortgages on single-family homes in rural areas, as long as the loan is $750,000 or less (combined with any other similar loans on that same home). Third, it includes loans for aquaculture facilities like fish farms. The key requirement is that the lender must be a regular bank with FDIC insurance or a subsidiary of a bank holding company operating in the United States.

The practical effect is that banks might be incentivized to offer better interest rates or more favorable lending terms to rural borrowers, since the banks themselves will save money on taxes. However, this is essentially a subsidy paid for by other taxpayers—the government loses tax revenue that would have otherwise come from these banks' interest income. The bill would take effect for any loans made after it becomes law, and it applies to tax years going forward.

ACRE Act of 2023

Feenstra, Randy

Access to Credit for our Rural Economy Act of 2023 or the ACRE Act of 2023 This bill excludes from the gross income of certain financial lending institutions, for income tax purposes, interest received on loans secured by rural or agricultural real estate.