Black farmers in America have several distinct federal channels for financial help and land protection: the Pigford settlements for historical USDA lending discrimination, the Discrimination Financial Assistance Program funded by the Inflation Reduction Act, Section 22006 relief for distressed farm-loan borrowers, heirs property tools that include a dedicated USDA relending fund, and ongoing outreach and land-access grants for underserved producers. Each program has its own eligibility rules, its own deadlines, and its own tax consequences, and most of them are now either closed to new applicants or winding down.
Why These Programs Exist
Black agricultural participation peaked around 1910, when roughly 920,000 Black farmers worked more than 16 million acres and made up about 14 percent of all U.S. farmers.1U.S. Census Bureau. Bulletin 385 – Agriculture: Age of Farmers, by Color, Tenure, and Size of Farm By 1997, Black-owned farmland had dropped to about 1.5 million acres.2USDA Economic Research Service. Rural America – Who Owns the Land? Agricultural Land Ownership by Race/Ethnicity USDA county committees controlled access to federal farm loans and program benefits through much of the 20th century, and Black applicants were routinely denied or delayed. Land passed down without wills fractured into heirs property, leaving families unable to use their own acreage as collateral.
The 2022 Census of Agriculture recorded 41,807 Black or African American producers operating about 4.3 million acres, the first acreage rebound in a century.3USDA National Agricultural Statistics Service. 2022 Census of Agriculture – Table 51: Black or African American Producers The federal programs below are the reason most of that recovery is possible, and understanding what each one actually offers is the practical starting point.
The Pigford Settlements
Pigford v. Glickman was a class action alleging that USDA systematically denied Black farmers’ loan applications and ignored their discrimination complaints. A federal judge in Washington, D.C., approved the consent decree on April 14, 1999.4United States District Court for the District of Columbia. Pigford v. Glickman Opinion The class covered Black farmers who farmed or attempted to farm between January 1, 1981, and December 31, 1996, applied to USDA for credit or program benefits, and filed a discrimination complaint by July 1, 1997.
Claimants could choose Track A, which paid a flat $50,000 plus USDA debt forgiveness and a tax offset on a lighter evidentiary standard, or Track B, which required formal hearings but allowed recovery of actual losses. Track A payouts totaled roughly $1 billion.
Thousands of Black farmers missed the original filing window, and Congress addressed that group in the Claims Resolution Act of 2010, which appropriated $1.15 billion for late filers under the same two-track structure. This second round was known as Pigford II.5U.S. Government Publishing Office. Public Law 111-291 – Claims Resolution Act of 2010 Both Pigford filing periods are closed. If you did not file by the applicable deadline, the current federal remedy is DFAP, not Pigford.
The Discrimination Financial Assistance Program
Section 22007 of the Inflation Reduction Act created the Discrimination Financial Assistance Program, a $2.2 billion fund for farmers, ranchers, and forest landowners who experienced discrimination in USDA farm lending before 2021.6SAM.gov. Discrimination Financial Assistance Program Unlike Pigford, DFAP covers discrimination based on race, sex, disability, and other protected characteristics, so it is not limited to Black applicants.
USDA opened applications in July 2023 and announced awards on July 31, 2024.7USDA. Discrimination Financial Assistance Program The statute caps any single award at $500,000, but the practical average is much lower. USDA estimated that if 50,000 people qualified, the average payment would be about $40,000; with 85,000 eligible applicants, the average would fall to roughly $25,000.8USDA. DFAP Application FAQ Individual amounts turn on the nature and severity of the discrimination described.
Awards have been announced and the intake window is closed. If you received one, the tax rules below apply.
Section 22006 Relief for Distressed Borrowers
Section 22006 of the same law authorized $3.1 billion to help farmers in financial distress with their existing Farm Service Agency loans.9Farmers.gov. Inflation Reduction Act Investment in USDA’s FPAC Programs – Section: Funds for Financially Distressed Borrowers This provision is race-neutral. Any borrower with a qualifying FSA direct or guaranteed loan facing hardship can qualify, though the program reaches historically underserved producers disproportionately because those borrowers are more likely to carry FSA debt.
Most payments were automatic. Nearly $600 million went to about 11,000 borrowers who were at least 60 days delinquent as of September 30, 2022, and roughly $200 million cleared remaining debts for about 2,100 borrowers whose collateral had already been liquidated.10Farmers.gov. Inflation Reduction Act Section 22006 Factsheet Borrowers in bankruptcy or foreclosure received case-by-case review.
By December 2024, USDA had provided about $2.5 billion to more than 47,800 distressed borrowers and announced a final round of roughly $300 million in automatic payments.11USDA. USDA Announces Final $300 Million in Automatic Assistance for Distressed Farm Loan Borrowers USDA said it did not expect further funds for additional assistance after that round, so Section 22006 is essentially complete.
Taxes on Awards and Debt Relief
Any dollar received through these programs creates a tax obligation, and the rules differ by program.
DFAP Payments
DFAP awards are taxable income. The IRS treats them as gross income under Section 61 of the Internal Revenue Code, and recipients receive a Form 1099-MISC from USDA.12IRS. Frequently Asked Questions About USDA’s Discrimination Financial Assistance Program Whether self-employment tax also applies depends on whether the recipient was actively farming at the time of the discrimination.
Attorney fees paid in connection with the discrimination claim are deductible above the line, capped at the amount of the DFAP payment, and claimed on Schedule 1 (Form 1040), line 24h.12IRS. Frequently Asked Questions About USDA’s Discrimination Financial Assistance Program Above the line means the deduction reduces adjusted gross income directly.
Section 22006 Debt Relief
When USDA pays down or eliminates a farm loan balance, the IRS generally treats the forgiven amount as cancellation-of-debt income. Three exclusions can reduce or eliminate that tax:
- Insolvency: if your debts exceed your total assets at the time of forgiveness, you can exclude the forgiven amount up to the extent of your insolvency.
- Qualified farm indebtedness: if at least 50 percent of your gross receipts for the three years before forgiveness came from farming, canceled debt tied to your farming operation is excludable.
- Bankruptcy: debt discharged through a bankruptcy proceeding is not taxable, but the forgiveness must result from the bankruptcy itself, not from a separate IRA payment that happened to occur during the case.
Each exclusion requires reducing certain tax attributes, such as basis in farm property or net operating losses. A tax professional familiar with farm income is worth consulting before filing, because picking the wrong exclusion or miscalculating the attribute reduction can create problems in later years.
Heirs Property
Heirs property is land passed down after a family member dies without a will, leaving several descendants as co-owners of the whole parcel rather than owners of specific pieces. Without clean title you often cannot get a USDA farm number, qualify for federal conservation programs, or use the land as collateral. Heirs property remains one of the largest structural drivers of Black land loss.
The risk sharpens when any single co-owner sells a share to an outside buyer, who can then petition a court for a partition sale. The Uniform Partition of Heirs Property Act requires independent appraisals, gives co-owners a right of first refusal, and forces any court-ordered sale onto the open market. As of 2024, 26 states have enacted a version of the act.
Getting a Farm Number Without a Deed
The 2018 Farm Bill created a path for operators on heirs property to participate in FSA programs without a traditional deed or lease. You can submit alternative documentation to your local FSA office showing you are in general control of the farming operation.13Farmers.gov. Heirs’ Property Landowners Accepted documents vary by office. The point is to end the catch-22 where families who farmed land for generations were locked out of federal programs because probate had never been completed.
Heirs Property Relending Program
USDA lends up to $5 million at 1 percent interest to intermediary lenders such as credit unions, cooperatives, and nonprofits experienced with underserved producers.14Farmers.gov. Heirs’ Property Relending Program Those intermediaries re-lend to individual heirs who need money to buy out other family members’ fractional interests, pay for title searches and appraisals, cover legal fees, or finance a succession plan.
The loans cannot be used for land improvements, building repairs, operating expenses, or equipment. Applicants must be related by blood or marriage to the previous owner and must agree to complete a succession plan as a condition of the loan.14Farmers.gov. Heirs’ Property Relending Program
Ongoing Outreach and Land Access
Two ongoing USDA programs help producers who are still building or trying to hold onto a farming operation. Both work through intermediary organizations rather than paying farmers directly.
2501 Program
The Farming Opportunities Training and Outreach Program, known as 2501, funds community-based organizations, nonprofits, tribal entities, and colleges to provide direct technical assistance to socially disadvantaged and veteran farmers. Services include business training, financial planning, crop production guidance, and help navigating USDA itself.15USDA. Farming Opportunities Training and Outreach Grant Program Factsheet Applicant organizations must have at least three years of documented experience with the populations they serve.
Increasing Land, Capital, and Market Access
This FSA program targets three linked barriers: acquiring or retaining farmland, obtaining financing, and reaching markets. Grants go to nonprofits, community development financial institutions, tribal governments, and public universities, which then deliver wraparound technical assistance to underserved producers.16Farm Service Agency. Increasing Land, Capital, and Market Access Program Individual farmers cannot apply directly but benefit through the organizations that receive funding. Land access is the primary focus, with capital and market work supporting it, so business planning strong enough to secure financing and connections to land-matching services are typical services.
If you are a Black farmer looking for help right now, the most productive next step is usually to contact your local FSA office about heirs property options, distressed-loan status, and any current sign-ups, and then reach out to a 2501-funded organization in your region for technical assistance that is independent of the agency.