Proposed tax law measures concerning cooperatives in budget reconciliation bill (as passed by Senate)

U.S. Senate passed budget reconciliation legislation that includes measures concerning cooperatives

U.S. Senate passed H.R. 5376 that includes measures concerning cooperatives

The U.S. Senate on August 7, 2022, passed budget reconciliation legislation (H.R. 5376) that includes significant tax law changes.  All 50 Senate Democrats voted for the legislation, while all 50 Senate Republicans voted against it.  Vice President Harris cast the tie-breaking vote in favor of the legislation.  

The House of Representatives is expected to consider the bill on August 12, 2022.

Provisions in the bill of interest for cooperatives

The Senate bill includes a corporate alternative minimum tax (AMT) proposal that generally would apply to corporations with adjusted financial statement income reported of at least $1 billion, an average of adjusted pre-tax income, applying to tax years beginning after December 31, 2022.  The bill provides a special rule for cooperatives that allows for section 1382(b) deductions for patronage dividends; per-unit retain allocations paid in money (PURPIMs); and per-unit retain allocations paid in certificates (PURPICs)—thereby substantially negating the possibility that this new AMT would affect most cooperatives and thus providing good news for the cooperative industry. Read the provision in the text of the bill [PDF 952 KB] (on page 18).

Other provisions provide two new tax credits for which agricultural cooperatives would be eligible. 

  • A new section 45Y clean electricity production credit
  • A new section 45Z clean fuel production credit

Both new credits include language enabling agricultural cooperatives to pass through the credits to their patrons on the basis of the amount of business conducted with the cooperative.  Read the provision in the text of the bill [PDF 952 KB] (on page 448) and in the text of the bill [PDF 952 KB] (on page 491). 

KPMG observation

KPMG LLP has prepared a report that provides preliminary analysis and observations regarding the Senate bill based on the legislative text for the final bill that was released the morning of August 9, 2022, and on the Joint Committee on Taxation (JCT) revenue estimates released later that same day. 

Read KPMG’s report (August 10, 2022) [PDF 1.3 MB] (70 pages) about the tax law changes in the Senate bill

For more information, contact KPMG’s National Director of Cooperative Tax Services:

David Antoni |

Associate National Director of KPMG’s Cooperative Tax Services:

Brett Huston |


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