Understanding the ECAP Application

April 4, 2025 | Kristine A. Tidgren

On December 21, 2024, Congress enacted the American Relief Act of 2025, P.L. 118-158, which averted a government shutdown and extended the Farm Bill for the second time in two years. The Act also allocated $10 billion in funding to provide economic assistance to farmers because of expected economic losses incurred in growing 2024 commodities. Congress gave the USDA 90 days to begin distributing the relief payments.

On March 18, 2025, the USDA unveiled the Emergency Commodity Assistance Program (ECAP), the vehicle to administer the distribution of these emergency funds. USDA-FSA began accepting applications for the program on March 19, 2025. All applications must be submitted by August 15, 2025. The regulations explain, “These payments are intended to help farmers cope with losses from natural disasters and a difficult farm economy and will help preserve family farms and ranches across the country while also continuing to ensure food and agricultural security for our nation.”

Eligible Producers

To be eligible for relief, the applicant must:

Be actively engaged in farming (as specified in 7 U.S.C. § 1308-1)
Be a Citizen of the U.S., a resident alien, a business entity organized under state law, an Indian tribe or Tribal organization, or a foreign person or entity who meets the requirements of 7 C.F.R. part 1400
Have an interest in input expenses for a commodity covered by the program
Have reported planted and prevented planted acres to FSA
- Producers who have not previously reported their 2024 crop year acreage of eligible commodities, and filed a notice of loss for prevented planted crops, may report their acreage of eligible commodities on FSA-578 and submit CCC-576 for prevented planting through the August 15, 2025, deadline

Eligible Commodities

Eligible commodities for ECAP are: wheat, corn, sorghum, barley, oats, upland cotton, extra-long staple cotton, long grain rice, medium grain rice, peanuts, soybeans, other oilseeds, dry peas, lentils, small chickpeas, and large chickpeas. Eligible “other oilseeds” are canola, crambe, flax, mustard, rapeseed, safflower, sesame, and sunflower.

Eligible Acres

The eligible acres of an eligible commodity on a farm are equal to the sum of:

the acres planted on the farm to the eligible commodity for harvest, grazing, haying, silage, or other similar purposes for the 2024 crop year; and
50 percent of the acres on the farm prevented from being planted during the 2024 crop year to the eligible commodity because of drought, flood, or other natural disaster, or other condition beyond the control of the producers on the farm, as determined by the Secretary of Agriculture.

Only U.S. acres are eligible for payment. In cases where an initial eligible commodity failed or was prevented from being planted and the producer planted a subsequent eligible commodity for the 2024 crop year, the initial crop will be eligible for ECAP if it was an eligible commodity. If the subsequent crop that was planted or prevented from being planted was also an eligible commodity, it will also be eligible for ECAP if it was in an approved double cropping combination. If the combination does not meet the definition of an approved double cropping situation, only the initial commodity will be eligible for an ECAP payment. A subsequent eligible commodity will also be eligible for ECAP when it is planted or prevented from being planted after an initial crop that is not an eligible commodity or a fruit, vegetable, or wild rice, and the combination does not meet the existing definition of an approved double cropping situation.

Payments Rates and Calculation

USDA has set the per acre payment rate for each eligible commodity as follows in the table below. The regulations explain in detail how these payment rates were derived from instructions given by Congress.

USDA is limiting all initial payments to 85 percent of the product of the payment rate and the eligible acres (payment rate x eligible acres) to ensure that payments do not exceed the available funding. The agency may issue an additional payment if funding remains available after initial prorated ECAP payments are issued to eligible producers.

Payments are based upon acreage and not production. As explained above, for prevent plant acres, ECAP payments are limited to 50 percent determined acres or reported acres if determined acres are not present. Determined acres are established by an FSA representative by use of official acreage, digitizing areas on a photograph or other imagery, or computations from scaled dimensions or ground measurements.

Producers can access the USDA payment calculator for a payment estimate at fsa.usda.gov/ecap.

Payment Limitations

Like other programs, ECAP payments are subject to statutory caps called payment limitations. The ECAP payment limitation is separate from the payment limitation for other government programs. This means that other government program payments do not count toward the ECAP payment limitation.

For producers whose calculated payment exceeds $125,000, Congress has provided an enhanced limit of $250,000 if 75 percent or more of a producer’s income comes from farming. Specifically, the limit for a person or legal entity (other than a partnership or joint venture) is:

Up to $125,000 if less than 75 percent of the average gross income of the person or legal entity for the 2020, 2021, and 2022 tax years is derived from farming, ranching, or silviculture activities OR
Up to $250,000, if not less than 75 percent of the average gross income of the person or legal entity for the 2020, 2021, and 2022 tax years is derived from farming, ranching, or silviculture activities.

This limit is applied both at the entity and individual level. There is no payment limitation applied to joint ventures and general partnerships. The combined payments to partners in a general partnership, for example, can exceed the above caps. The payment limitation applies only to the individual partners.

Note: The ECAP program does not apply AGI limits at all. ECAP payments are therefore available to eligible producers or entities with less than or more than $900,000 of AGI.

Qualifying for the Enhanced Limit

If a producer’s calculated payment exceeds $125,000, they can engage a CPA, an enrolled agent (EA), or an attorney to certify that 75 percent or more of their average gross income is from farming. With this certification, the producer is eligible for the higher $250,000 payment cap. The producer must submit a form CCC-943, and the tax professional can make the certification directly on that form or in a separate letter. New to this program, EAs now have the authority to make this certification. EA authority applies only to ECAP.

Definition of Farm Income for the Calculation

USDA defines gross income from farming, ranching, or silviculture as income from the following activities:

Farm income also includes wages or dividends received from a “closely held” corporation, an IC-DISC or a legal entity comprised entirely of family members when the legal entity is “materially participating” in farming, ranching, or forestry activities. “Materially participating” means more than 50 percent of the legal entity’s gross receipts for each tax year are derived from farming, ranching, or forestry sources. A representative must attach a certification to form CCC-943 attesting that the legal entity “materially participates” in a farm, ranch, or forestry activity.

Farm income also includes any other activity related to farming, ranching, and forestry, as determined by the Deputy Administrator of Farm Programs and any income reported on Schedule F or other schedule used by the person or legal entity to report income from such operations to the IRS, as determined by the Deputy Administrator of Farm Programs.

Farm Machinery, Inputs, and Custom Farm Income

The sale of equipment used to conduct farm, ranch, or forestry operations and the provision of production inputs and services to farmers, ranchers, foresters, and farm operations (custom hire income), is only included in farm income if the average gross income from farming (without including the equipment and production inputs) is at least 66.66 percent of the average gross income from all sources.

New Approach for Enhanced Limit

Although producers have had the opportunity to increase their payment limit from $125,000 to $250,000 in past programs such as the Emergency Relief Program (ERP), past programs used “adjusted gross income” (AGI) for its measure. AGI is not the same as gross income. AGI for prior programs was defined in I.R.C. § 62, which says that AGI is gross income minus trade and business deductions, losses from the sale or exchange of property, I.R.C. § 212 expenses, and other non-business deductions, such as the HSA deduction. The FSA has stated, for example, that farm AGI for FSA purposes is net income from farming.

For ECAP, Congress specifically and intentionally changed “adjusted gross income” to “gross income.” This change was made to ensure a more accurate reflection of farm activity and to fairly assess producers with negative net farm income. This has not been a straightforward change.

Inconsistency in the Regulations

The regulations state that ECAP will use the definition of “gross income” found in I.R.C. § 61, but the regulations also say:

The term “gross income” is not used by IRS on tax forms; therefore, to ensure consistency and provide a logical approach for producers, average gross income will be calculated based on the applicable 3-year average (2020, 2021, and 2022) of the reported “total income” on IRS forms 1040, 1041, 1065, and 1120, or similar reported income.

In keeping with this guidance, the updated FSA handbook (6-PL, Amend. 7) lists the specific line numbers on tax forms that should be used to determine average gross income for different types of producers:

While at first glance this sounds simple, the “total income” line does not correspond to the statutory definition of “gross income.” The composition of items included in this line is also inconsistent across forms.

“Gross income” is defined as all income from whatever source derived. I.R.C. § 61. “Gross farm income,” is defined by regulation as gross income from all sources, including the cash and value received from raised livestock and produce and the profit from the sale of purchased livestock or other items. 6 CFR § 1.61-4. Under the regulations, the cost of goods sold subtracted from farm revenue to yield gross income from farming is the price paid for livestock and other items purchased for resale. All expenses, including seed, feed and fertilizer, are deducted as ordinary and necessary business expenses, not included in the gross income calculation. Treas. Reg. § 1.162-12. Schedule F reports this gross income amount on line 9. Gross income from the sale of property is equal to any gain from the sale. Treas. Reg. § 1.61-6. Gain is defined as amount realized minus the basis.

While the “total income” lines on the 1120 and the 1120 S generally comprise gross farm and business income, the “total income” lines on Forms 1040, 1065, and 1041, incorporate net Schedule F, Schedule C, and Schedule E income. The “total income” lines on all of the forms incorporate net income from the sale of property. Likewise, Form 1040 includes an NOL in the total income line. This is not a gross income calculation as intended by Congress.

If tax professionals seek to determine the percentage of gross income attributable to farming, they would generally use the “gross income” line 9 on the Schedule F (considering that line 7, custom hire, is only included as explained above), plus gross income from other sources such as the Form 4797, Schedule D, Schedule E, and Schedule C. If they then use the “total income” line as the denominator in this equation (gross income from farming/gross income), the numerator would comprise gross income, and the denominator would comprise net income. This calculation would not be consistent and would ensure that nearly all producers seeking to increase their payment limitation would qualify for the higher cap. Changing the numerator to a net income calculation for consistency would defeat the changes Congress sought to make by switching from AGI to gross income.

Statutory Definition Over Form Line

Although the regulations direct the use of the “total income” line, they specify that “average gross income” means the average of the gross income as defined under I.R.C. § 61 of the person or legal entity, for the 2020, 2021 and 2022 tax years. Tax professionals should follow this directive. The Handbook on pages 8-80 and 8-81 require tax professionals to make a certification declaring that “average gross income as defined under I.R.C. § 61 has been used.” This should be the primary consideration in the gross income calculation.

We will be watching for further guidance from USDA-FSA on this issue. Remember, this is only an issue for those producers whose calculated payments exceed $125,000.

Application Process

Eligible individuals and entities must submit their applications for ECAP by August 15, 2025. USDA has planned to mail pre-filled applications to producers who reported acreage of eligible commodities to FSA for the 2024 crop year. But farmers don’t have to wait to receive this application to apply. They can go to the FSA office and request an application, They can also fill out an application online at fsa.usda.gov/ecap. Producers may finalize and submit paper applications via fax, email, electronically through Box and One-span, or in person at an FSA County Office. Only one application is required for all ECAP eligible commodities nationwide. Once the application is submitted, the payments are generally received within a short number of days.

In addition to finalizing the applications, producers must ensure that the following forms are on file for the 2024 crop year:

Form AD-2047, Customer Data Worksheet.
Form CCC-902, Farm Operating Plan for an individual or legal entity.
Form CCC-901, Member Information for Legal Entities (if payment is made to an entity).
Form FSA-510, Request for an Exception to the $125,000 Payment Limitation for Certain Programs (if 75% or more of AGI is from farming).
Form AD-1026 Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC) Certification) for the ERP producer and applicable affiliates.
SF-3881, ACH Vendor/Miscellaneous Payment Enrollment Form (Direct Deposit)
Form CCC-943, 75% of Average Gross Income from Farming, Ranching, or Forestry Certification (if applicable)