Tax Season in Bloom, But Key Provisions About to Wilt

Tax Season Springing Up

With the blustery cold we have seen across most parts of the country in recent days, it’s hard to believe that spring is right around the corner. Springtime brings planting, fresh blossoms, and, of course, taxes.

For many farmers, spring is a season of planning and planting. A big part of planning wisely is understanding what tax provisions our farm businesses qualify for. But the challenge this spring is that many critical business provisions are set to expire by the end of the year. We have heard that lawmakers plan to make this a priority this year, and we need to hold them to it, for the future of our farms and our food supply. If key tax provisions are not renewed quickly this year, it will mean billions of dollars in tax increases for farm and ranch families.

Tax Code Should Help Family Businesses Blossom

Farmers and ranchers face a variety of pressures and unpredictable challenges from changing weather to fluctuating markets. According to the last USDA Census of Agriculture, America has lost 141,000 farms in a five-year period. To put that another way, that is roughly 77 farms per day going out of business. Low commodity prices, rising supply costs, inflation and outdated farm policy provisions threaten to destroy the dreams of thousands more. The tax code shouldn’t add to the uncertainty.

Family run businesses need a tax code that encourages investment and helps them remain economically sustainable in all seasons. While the Tax Cuts and Jobs Act of 2017 made several key tax provisions permanent, farm businesses and rural Americans also rely on provisions that are about to expire, including:

• Reduced pass-through tax rates and expanded brackets;
• 20% business income deduction, or 199A;
• Unlimited bonus depreciation (expensing);
• Doubled estate tax exemption of $11 million person/$22 million couple; and
• Increased Alternative Minimum Tax Threshold for individuals.

In addition to these provisions, Farm Bureau also supports continuing an unlimited stepped-up basis for farm and ranch businesses, indexing capital gains for inflation, prohibiting the collection of capital gains at death, and permanently eliminating estate taxes.

Tax Code Should Boost Economic Sustainability

Farm and ranch families want to plan not only for the next season, but also for the next generation. It is getting harder for young and beginning farmers to get their start or come back to the farm—especially when they don’t know what kind of tax bill might be waiting for them. America needs the next generation ready and able to take up the mission of growing our nation’s food, fiber and renewable fuel, especially as the average age of the American farmer nears retirement. Yet provisions that will expire this year, including lower individual income tax rates and a higher standard deduction, will increase tax liability by $4.5 billion for all farm households. Our family farms—and the families across this country who are counting on us—deserve better.

At Farm Bureau, we are all hands-on deck to ensure Congress takes swift action to make these tax provisions permanent for our farm and ranch families. Together, let’s keep holding our lawmakers to their word. They have promised to make tax reform a priority, and the season has come for them to get it done.