Unique Cooperative Tax Deduction Impacted by Recent Legislation
Sep 16, 2025
Section 199A(g)
What is Section 199A(g)?
Section 199 was introduced as part of the Tax Cuts and Jobs Act (TCJA) of 2017 to replace the former Domestic Production Activities Deduction (DPAD) under Section 199. This deduction allows eligible cooperatives to reduce their taxable income. Section 199 has been a valuable tax deduction for agriculture cooperatives over the years.
What does Section 199 mean for you?
One of the key benefits of Section 199 is that cooperatives like Key can pass a portion of the deduction through to farmer-members, enabling individual farmers who market their products through a cooperative to be eligible to receive a tax benefit under Section 199. This tax deduction is unique in the sense that it’s only offered to cooperatives. Private elevators and processors cannot provide this benefit.
Section 199 is now permanent
Iowa’s federal delegation had been in discussions on Section 199 A(g) because it was set to sunset in December 2025. This summer, President Trump signed the One Big Beautiful Bill into law and made the Section 199 tax deduction permanent.
The benefit of Section 199 at Key Cooperative
Key has a strong history of passing a portion of this deduction back to our member-owners. We encourage you to talk to a member of our grain team to discuss how the following may benefit your operation.
- Grain delivered to Key Cooperative is eligible for Section 199 (formerly DPAD) at the rates determined annually by the Key Cooperative Board of Directors.
- Grain delivered directly to a terminal but sold through Key Cooperative is also eligible for Section 199.
- Key Cooperative is proud to have passed through more than $43 million of Section 199, including $30 million in cash patronage. We’ve built more than $80 million in equity for our member-owners.
- While utilizing $35 million in Section 199 since 2005, Key Cooperative has invested more than $165 million in local assets and paid more than $17 million in property taxes.
*Data provided by the Iowa Institute for Cooperatives