What question did this study set out to answer?

The research investigates how the Tax Cuts and Jobs Act influences organizational structure and labor expenses in farms.

April 10, 2026Open Access

Tax Policy and Farm Organization

Key Points

The research investigates how the Tax Cuts and Jobs Act influences organizational structure and labor expenses in farms.
Analyzed farm responses to the Tax Cuts and Jobs Act at both extensive and intensive margins.
Utilized logit regression to assess the likelihood of S corporation selection for tax purposes.
Employed fuzzy regression discontinuity design to evaluate changes in wage expenses in response to QBID income limits.
Farms show increased likelihood of being organized as S corporations after the TCJA.
Significant rise in wage expenses was noted in response to QBID income limits.

Abstract

ABSTRACT The Tax Cuts and Jobs Act (TCJA) introduced substantial changes to the tax code, affecting farms' organizational incentives. This study examines farms' responses to the TCJA along extensive and intensive margins, focusing on organizational 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 Qualified Business Income Deduction (QBID). We find farms are more likely to be organized as S corporations after the TCJA. Furthermore, using a fuzzy regression discontinuity design, we demonstrate a significant increase in wage expenses in response to QBID income limits.

Tax Policy and Farm Organization

Key Points

Abstract

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