ACRE Act of 2025
- Bill Number
- H.R. 1822
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-03-04: Referred to the House Committee on Ways and Means.
- Last Updated
- 2025-12-19T09:07:35Z
AI-Generated Summary
Purpose of the Legislation
The Access to Credit for our Rural Economy Act of 2025 (ACRE Act of 2025) aims to encourage lending for rural and agricultural properties by making the interest income from certain loans tax-free for lenders. This is intended to improve access to affordable credit in rural areas, supporting farming, fishing, and related activities.
Key Provisions
- Tax Exclusion for Interest Income: Adds a new section (139J) to the Internal Revenue Code of 1986, excluding from a lender's gross income (the total income subject to tax) any interest earned on "qualified real estate loans." This applies to loans made after the bill's enactment.
- Definition of Qualified Lender: Includes:
- Banks or savings associations insured by the federal government.
- State- or federally-regulated insurance companies.
- Entities fully owned by U.S.-based bank or insurance holding companies.
- The Farm Credit System (a government-backed lender for agriculture) for loans on farmland or forestland.
- Definition of Qualified Real Estate Loan: Covers loans secured by:
- Rural or agricultural real property (used mainly for producing crops, livestock, or other farm products), forestland, or leasehold mortgages on such property.
- Single-family homes in rural areas that serve as the owner's primary residence (principal limited to $750,000 total across loans).
- Property used for fishing, seafood processing, or aquaculture facilities (e.g., fish farms, hatcheries).
- Loans must go to borrowers who are not "foreign adversary entities" (explained below) and cannot refinance pre-enactment loans.
- Foreign Adversary Entities: Borrowers from these are excluded to protect U.S. interests. Defined as entities tied to countries including China (including Hong Kong and Macau), Cuba, Iran, North Korea, Russia, or Venezuela under President Nicolás Maduro. This includes persons or organizations under their jurisdiction or control.
- Tax Treatment Coordination: Treats these loans as fully tax-exempt obligations under existing tax rules (section 265), meaning no tax deduction is needed for related expenses.
- Reporting Requirement: The U.S. Treasury Secretary must report to Congress within 5 years on the provision's effects, including data on loan volumes and whether it has lowered interest rates for borrowers.
- Effective Date: Applies to tax years ending after the bill's enactment date.
Significant Changes to Existing Law
- Introduces a new tax exclusion specifically for interest on rural and agricultural loans, which is not currently available under the Internal Revenue Code. Previously, lenders paid taxes on all interest income, potentially increasing borrowing costs.
- Adds restrictions on loans to foreign adversaries, a change not previously specified in this context for tax exclusions.
- Requires a future impact report, creating a new oversight mechanism for this tax benefit.
Potential Impacts
- On Government Agencies: The Treasury Department will face administrative burdens for tracking and reporting on the exclusion's effects, and the federal government may see reduced tax revenue from lenders' untaxed interest income.
- On Citizens: Rural residents, farmers, fishers, and aquaculture operators could benefit from lower loan interest rates due to lenders' tax savings, making it easier to buy, improve, or finance properties. Urban or non-rural borrowers are unaffected.
- On International Relations: By barring loans to entities linked to designated foreign adversaries, the law could limit U.S. financial ties to those countries, potentially straining relations but aligning with national security goals.
Main Stakeholders Affected
- Rural and Agricultural Borrowers: Farmers, rural homeowners, fishers, seafood processors, and aquaculture operators who rely on loans for property purchases or improvements.
- Lenders: Banks, insurance companies, holding company subsidiaries, and the Farm Credit System, who gain tax benefits but must comply with borrower eligibility rules.
- U.S. Government: Treasury (for implementation and reporting) and congressional committees (Ways and Means in the House, Finance in the Senate) overseeing tax policy and rural economic impacts.
- Foreign Entities: Organizations or individuals tied to the listed adversary countries, who are excluded from this lending benefit.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens tax incentives for rural lending, potentially increasing compliance needs for lenders to verify borrower status and property types. The exclusion could face challenges if interpreted as overly narrow or broad, but it fits within Congress's authority to shape tax policy.
- Constitutional: No apparent issues; tax exemptions are a standard congressional power under Article I, and the foreign adversary restrictions align with existing national security laws without infringing on due process for U.S. citizens.
- Political: Promotes rural economic development, which may appeal to agricultural states, but the tax revenue loss could spark debates on fiscal priorities. The bill's focus on excluding specific foreign countries reflects ongoing geopolitical tensions without introducing new controversies.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (63)
Rep. Davis, Donald G. [D-NC-1], Rep. Moran, Nathaniel [R-TX-1], Rep. Bost, Mike [R-IL-12], Rep. Bice, Stephanie I. [R-OK-5], Rep. Estes, Ron [R-KS-4], Rep. LaHood, Darin [R-IL-16], Rep. Nunn, Zachary [R-IA-3], Rep. Fields, Cleo [D-LA-6], Rep. Scholten, Hillary J. [D-MI-3], Rep. Schmidt, Derek [R-KS-2], Rep. Neguse, Joe [D-CO-2], Rep. Fitzgerald, Scott [R-WI-5], Rep. Johnson, Dusty [R-SD-At Large], Rep. Van Orden, Derrick [R-WI-3], Rep. Steil, Bryan [R-WI-1], Rep. Pettersen, Brittany [D-CO-7], Rep. Costa, Jim [D-CA-21], Rep. Mann, Tracey [R-KS-1], Rep. Miller-Meeks, Mariannette [R-IA-1], Rep. Valadao, David G. [R-CA-22], Rep. Finstad, Brad [R-MN-1], Rep. Bergman, Jack [R-MI-1], Rep. Moolenaar, John R. [R-MI-2], Rep. Moore, Blake D. [R-UT-1], Rep. Hinson, Ashley [R-IA-2], Rep. Barr, Andy [R-KY-6], Rep. Wagner, Ann [R-MO-2], Rep. Bilirakis, Gus M. [R-FL-12], Rep. McClain, Lisa C. [R-MI-9], Rep. Van Drew, Jefferson [R-NJ-2], Rep. Kustoff, David [R-TN-8], Rep. Graves, Sam [R-MO-6], Rep. Panetta, Jimmy [D-CA-19], Rep. Carbajal, Salud O. [D-CA-24], Rep. Meuser, Daniel [R-PA-9], Rep. Budzinski, Nikki [D-IL-13], Rep. Flood, Mike [R-NE-1], Rep. Ross, Deborah K. [D-NC-2], Rep. Pappas, Chris [D-NH-1], Rep. De La Cruz, Monica [R-TX-15], Rep. Fitzpatrick, Brian K. [R-PA-1], Rep. Conaway, Herbert C. [D-NJ-3], Rep. Fischbach, Michelle [R-MN-7], Rep. Fedorchak, Julie [R-ND-At Large], Rep. Salinas, Andrea [D-OR-6], Rep. Carter, Earl L. "Buddy" [R-GA-1], Rep. Owens, Burgess [R-UT-4], Rep. Sewell, Terri A. [D-AL-7], Rep. Bishop, Sanford D. [D-GA-2], Rep. McBride, Sarah [D-DE-At Large] and 13 more
Recent Actions
- 2025-03-04: Referred to the House Committee on Ways and Means.
- 2025-03-04: Introduced in House
- 2025-03-04: Introduced in House
Bill Versions
- Access to Credit for our Rural Economy Act of 2025 — issued 2025-03-04 — PDF (7 pages)