S.838 - Access to Credit for our Rural Economy Act of 2025; ACRE Act of 2025 (119th Congress)
Summary
The ACRE Act of 2025 (S.838) aims to amend the Internal Revenue Code of 1986 by excluding interest received on certain loans secured by rural or agricultural real property from gross income. This exclusion would apply to qualified lenders, including banks, savings associations, insurance companies, and certain entities owned by bank or insurance holding companies. The bill defines 'qualified real estate loan' and 'rural or agricultural real estate' to specify the types of loans and properties eligible for the interest exclusion.
Expected Effects
If enacted, the ACRE Act is likely to reduce the cost of borrowing for individuals and businesses in rural and agricultural areas. This could stimulate investment in these sectors, potentially leading to increased economic activity and job creation. The Act also includes a provision requiring the Secretary of the Treasury to report to Congress on the impact of the interest exclusion on qualified real estate loans within five years of enactment.
Potential Benefits
- Reduced borrowing costs: Individuals and businesses in rural areas may benefit from lower interest rates on loans for agricultural real estate.
- Increased investment: The reduced cost of borrowing could encourage investment in rural and agricultural sectors.
- Economic stimulus: Increased investment may lead to economic growth and job creation in rural communities.
- Support for farmers: The Act could provide financial relief to farmers and agricultural businesses.
- Improved housing affordability: The Act includes provisions for single-family residences in rural areas, potentially improving housing affordability.
Potential Disadvantages
- Potential revenue loss: Excluding interest income from taxation could reduce government revenue.
- Complexity: The definitions of 'qualified lender' and 'qualified real estate loan' may create complexity and potential loopholes.
- Limited scope: The benefits of the Act are primarily targeted at rural and agricultural areas, potentially excluding other sectors.
- Risk of abuse: The interest exclusion could be exploited by foreign adversary entities if not properly monitored.
- Uncertain impact: The actual impact of the Act on interest rates and investment is uncertain and may depend on other economic factors.
Most Disadvantaged Areas:
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution (Preamble), as it aims to promote economic growth and opportunity in rural areas. Congress has the power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States (Article I, Section 8, Clause 1). This bill modifies the tax code, which falls under this enumerated power. The bill does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).