Estate Taxes are threatening America’s family farms

We have heard a lot of talk lately about the current estate tax. The exemption level is set to expire in 2025, unless congress makes a permanent change. This is critical to farmers and ranchers so they can maximize their profit potential.

The Tax Cuts and Jobs Act of 2017 included an estate tax exemption that expires in 2025. The Farm Bureau’s chief economist says that the current exemption covers a transfer of assets up to $11.58 million dollars.

According to AFBF’s John Newton, “After December of 2025, that amount returns to a $5 million dollar inflation adjusted level. So, if we don’t get a permanent extension of the $11.58 million dollars, or we go back to a lower exemption level, that really risks the family farm operations across the country.”

Based on 2020 data, it would take about 3,700-acres, or three Mount Rushmores, to reach the current estate tax exemption.

“If you have asset values that are above that $11.58 million dollars, those are going to be subject to the estate taxes, which can be as high as 40 percent,” Newton states. “If we potentially lower the estate tax exemption to $3.5 million dollars, or an inflation adjusted $5 million dollars, we’re looking at more assets out there being subjected to additional taxes, and some are looking at that as a ‘pay for’ to pay for other policy objectives.”

Estate taxes, also called the “death tax” by critics, are particularly concerning to farmers and ranchers, because they are based on market value, often forcing families to liquidate assets to meet their tax obligations.

“A lot of folks often point out that it’s a small percentage of the farm population across the country that would be subject to these estate taxes, but when you look at USDA data, it’s actually a large percentage of agricultural land area in this county that could be subject to these estate taxes upon death,” he adds. “We urgently need a fix to help and protect the family farm operation.”


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