By NFU Government Relations Staff

First posted Jan. 2, 2013

Late Tuesday night the House of Representatives passed Senate-negotiated fiscal cliff compromise legislation, the American Taxpayer Relief Act of 2012 (H.R. 8), sending the bill to the president’s desk and finally putting to rest the negotiations that had dominated the lame duck session of the 112th Congress. The Senate had previously passed the legislation in the early morning hours of Jan. 1.

Included in the legislation was a one-year extension of the 2008 Farm Bill, in addition to numerous provisions reauthorizing various expiring tax rates and credits. The final extension was a great disappointment. Congress had every opportunity to pass a new five-year farm bill by the end of the year but chose instead to ignore its rural constituents. In addition, the extension that was finally included in the fiscal cliff bill was not the version drafted by the chairs of the House and Senate Agriculture Committees, but one that was developed by Senate Minority Leader Mitch McConnell, R-Ky., without input from agriculture leaders.

Below is a preliminary analysis of some of the provisions included in the act:


  • Raises $620 billion of revenue over next 10 years
  • Tax rates permanently raised to 39.6 percent for individuals earning more than $400,000/year and couples earning more than $450,000/year
  • Estate tax permanently set at $5 million exemption for individuals indexed for inflation, $10 million exemption for couples, at a 40 percent rate (compared to the current 35 percent rate, and the $1 million exemption and 55 percent rate that would have kicked in had Congress taken no action)
    • Stepped-up basis is already permanent law and will continue
  • Capital gains and dividends are permanently set at 20 percent for individuals earning more than $400,000/year and couples earning more than $450,000/year (with rates for all other earners remaining at 15 percent)
  • Alternative Minimum Tax is permanently indexed to inflation to prevent middle-class taxpayers from being affected
  • The 2 percent payroll tax break is allowed to expire
  • Delays the $1.6 trillion in automatic “sequestration” budget cuts that would have begun in January as a result of last year’s failed deficit reduction committee process until March 1, 2013


  • Production Tax Credit for wind extended for 1 year for projects starting in 2013. By changing the eligibility criteria from when a wind project is hooked up to the grid to when a project is under construction, the language would in practice extend the PTC for two years since it takes 18-24 months to develop a project.
  • Cellulosic biofuel producer tax credit extended
  • Biodiesel tax credit extended


  • Reauthorizes Qualified Zone Academy Bonds, which help rural and disadvantaged schools raise funds for school renovations, technology updates, curriculum development and teacher training
  • Reauthorizes 50 percent bonus depreciation
  • Keeps in place the 2010/2011 levels for Section 179 small business expensing at a maximum write-off amount of $500,000, not to be used if more than $2 million of equipment is purchased in the year, for 2012/2013 (inaction would have reverted to a $25,000 maximum write-off amount and $200,000 purchase cap)
  • Cuts 90 percent of the unobligated funding for the loan program for qualified nonprofit health insurance issuers to establish a Consumer-Operated and -Oriented Plan under the Affordable Care Act. $1.9 billion of the $3.8 billion in loans included in the Affordable Care Act has not yet been spent, meaning that no new loans will be issued and the remaining 10 percent of the funding will be used to cover the administration costs of existing loans
  • Freezes Medicare payments to doctors, which otherwise would have been cut by at least 26.5 percent in 2013. The cost of the freeze is $25 billion over 10 years, which is offset by reductions in Medicare payments to hospitals and other changes to federal health programs.
  • Permanently allows National Health Service Corps (NHSC) recipients to exclude the scholarship or loan repayment from their taxable income for taxable years beginning after Dec. 31, 2012. The NHSC offers financial incentives for primary care providers who commit to practicing in underserved communities.


The 2008 Farm Bill is extended through Sept. 30, 2013, with some exceptions.

The provisions included in the fiscal cliff deal were not a straight extension of the 2008 bill, and the legislation provides no mandatory funding for the energy title, specialty crop and organic provisions, and beginning farmer and rancher programs, among others. In fact, all 37 programs whose baseline expired Sept. 30, 2012 or sooner receive no mandatory funding from the extension. Click here to view all 37 programs.


  • Extends current commodity terms and conditions for all commodities for the 2013 crop year, including sugar cane, sugar beets and peanuts
  • Continues direct payments, despite their elimination in both the House Ag Committee and Senate versions of the 2012 Farm Bill
    • However, it is important to note that preserving direct payments retains much-needed baseline for a new farm bill
  • Dairy Product Price Support Program: Extended through Dec. 31, 2013
  • Milk Income Loss Contract: Extended through Sept. 30, 2013
    • 45 percent rate is restored
    • Contains feed cost adjuster championed by Sen. Patrick Leahy, D-Vt., set at $7.35/cwt rather than the $9.50/cwt level most recently in place
    • These changes were scored at $110 million, offset by defunding two nutrition provisions (see “Nutrition” below)
  • Postpones 1949 law from taking effect until Sept. 30, 2013, except:
    • For covered commodities, postpones 1949 law from taking effect until after the 2013 crop or production year
    • For milk, postpones 1949 law from taking effect until Jan. 1, 2014


  • Maintains maximum enrollment in the Conservation Reserve Program at the same level (32 million acres) that has applied for fiscal years 2010 through 2012
  • Conservation Stewardship Program (CSP) is unchanged by extension but is currently on hold due to a funding error in Continuing Resolution last September. The CR means that Congress will not act on FY2013 appropriations bills until March. So, there is no money for CSP and no new signups can occur.
  • Voluntary Public Access Program is discretionary for FY 2013, authorized at $10 million (previously, received about $50 million/year in mandatory funding)
  • Environmental Quality Incentives Program (EQIP) was already extended through 2014 and is unchanged by the extension.


  • Authorizes discretionary funding for two programs under the Supplemental Nutrition Assistance Program (SNAP) which had previously received mandatory funding, the SNAP employment and training program and the nutrition education and obesity grant program
    • This funding is used to pay for changes to the MILC program (see “Commodities” above)
  • Otherwise, SNAP and other nutrition provisions are unchanged


  • Extends the following programs without mandatory funding:
    • Biobased Markets Program: reauthorized at previous level
    • Biorefinery Assistance Program: reauthorized at previous level
    • Repowering Assistance Program: reauthorized at previous level
    • Bioenergy Program for Advanced Biofuels: reauthorized at previous level
    • Biodiesel Fuel Education Program: $1 million for 2013
    • Rural Energy for America Program: reauthorized at previous level
    • Biomass Research and Development Program: reauthorized at previous level
    • Rural Energy Self-Sufficiency Initiative: reauthorized at previous level
    • Feedstock Flexibility Program for Bioenergy Producers
    • Biomass Crop Assistance Program: $20 million for 2013
    • Forest Biomass for Energy Program: reauthorized at previous level
    • Community Wood Energy Program: reauthorized at previous level

Research, horticulture, organic agriculture and beginning/socially disadvantaged farmer and rancher programs:

  • Extends the following programs without mandatory funding:
    • Specialty Crop Research Initiative: $100 million for 2013
    • Organic Agriculture Research and Extension Initiative: $25 million for 2013
    • Beginning Farmer and Rancher Development Program: $30 million for 2013 (in 2012, received $49 million in mandatory funding)
    • Farmers Market Promotion Program: $10 million for 2013 (in 2012, received $10 million in mandatory funding)
    • National Clean Plant Network: $5 million for 2013 (in 2012, received $5 million in mandatory funding)
    • National Organic Certification Cost-Share Program: $22 million for 2013
    • Organic Production and Market Data: $5 million for 2013
    • Outreach and Technical Assistance for Socially Disadvantaged Farmers or Ranchers: $20 million for 2013 (in 2012, received $20 million in mandatory funding)


  • The legislation provides no mandatory funding for disaster assistance, but authorizes the following discretionary funding levels for FY 2012 and FY 2013:
    • $80 million a year for livestock indemnity payments
    • $400 million a year for the livestock forage disaster program
    • $50 million a year for emergency assistance for livestock, honeybees and farm-raised fish
    • $20 million a year for the tree assistance program
  • Crop disaster programs are not reauthorized.

Terminated farm bill programs receiving no authorization for funding:

  • Supplemental Revenue Assistance Payments Program
  • Local and regional food aid procurement
  • McGovern-Dole International Food Program
  • Market Loss Assistance for asparagus producers
  • Survey and report requirements regarding foods purchased by school food authorities
  • Pending rural development loan and grant applications
  • Value-added Agricultural Market Development Program grants
  • National Sheep Industry Improvement Center
  • Rural Microentrepreneur Assistance Program


  • Hurricane Sandy disaster relief
  • Dairy Security Act provisions (stabilization and margin programs)
  • Significant tax or entitlement spending reform
  • An agreement to raise the debt ceiling