'Death Taxes' Threaten Family Farms
Samantha Ayoub
Associate Economist
Chad Smith
Associate News Service Editor, NAFB
photo credit: Getty
Samantha Ayoub
Associate Economist
Chad Smith
Associate News Service Editor, NAFB
Farmers and ranchers could face higher estate taxes if Congress fails to act before the end of the year. Chad Smith has more.
Smith: The 2017 Tax Cuts and Jobs Act contains provisions that are set to end in 2025, many of which are beneficial to farmers and ranchers. Without Congressional action, the estate tax exemption will drop to pre-2017 levels. Samantha Ayoub, an associate economist with the American Farm Bureau Federation, explains the state of play.
Ayoub: The Tax Cuts and Jobs Act doubled the estate tax exemption, so it went from anyone with a net worth greater than $5.5 million, in permanent statute, had to pay an estate tax to during TCJA years, it was $11 million, indexed for inflation. If Congress does not renew that provision, it would automatically revert to only five-and-a-half million dollars, indexed for inflation, starting in 2026.
Smith: She says farm and ranch families are already going through a difficult time, and cutting the estate tax exemption would only make it worse.
Ayoub: Families are already going through a very difficult time when they lose a loved one and are passing the farm on. And so, this adds an additional burden of trying to come up with up to 40 percent of your farm's value to pay the IRS. Most of farm assets come from non-liquid assets, mainly land. So, as land becomes more valuable, even when farms are facing losses, they're now being pushed above that exemption level due to rising land values.
Smith: Without additional changes to permanent tax law, farmers and ranchers are at risk.
Ayoub: If Congress continued to at least raise the exemption level, that, in permanency at the very least, that gets away from farms having to plan for the reversal back to $5.5 million dollars. It’s really that uncertainty that comes down at the end of the day.
Smith: Learn more on the Market Intel page at fb.org. Chad Smith, Washington.
