Net self-employment income is subject to a 15.3% self-employment tax. Congressional Response

Several bills have been introduced in recent Congresses to completely exclude CRP payments from self-employment income. During the first session of the 110 th Congress, two similar bills were introduced. Tax Credit

As proposed in the Farm Bill, participants in the CRP could elect to receive an annual tax credit rather than receiving the annual rental payments. This credit would be subject to neither income nor self-employment tax. Exclusion from Self-Employment Tax for Certain Individuals

Unlike earlier proposed legislation that would have excluded all CRP payments from self-employment income, the Farm Bill would exclude only those payments received by retirees and the disabled.
The Internal Revenue Service considers payments received under the Conservation Reserve Program (CRP) self-employment income even though they are called "annual rental payments," and rental income from real property is generally excluded from self-employment income. Bills have been repeatedly introduced before Congress to statutorily exclude the CRP payments from self-employment tax, but these bills generally have died in committee. In the 110 th Congress, the Senate passed H.R. 2419 , which contains a provision that would exclude the payments from self-employment income in some, but not all, cases. Unlike most previously introduced legislation, it would also provide a tax credit as an optional alternative to the current annual rental payments. This credit would be subject to neither income tax nor self-employment tax.