Family farms face tax hike with expiring act

Mar 15, 2024

By Farms.com

Enacted in 2017, the Tax Cuts and Jobs Act stands as a pillar of financial support for the agricultural sector, offering significant tax relief to farmers and ranchers. Nearly all farming operations, organized as pass-through businesses, have enjoyed the fruits of this legislation, benefiting from features like lower tax rates, enhanced estate tax exemptions, and the 199A deduction, which bridges the gap between small business and corporate tax rates.

Despite these advantages, the agricultural community stands on the precipice of a financial upheaval. If the Act's provisions expire in 2025 without renewal, the sector is expected to confront an unprecedented tax increase, with estimates suggesting a collective burden exceeding nine billion dollars in 2026. This spike is attributed to both rising income tax liabilities and estate tax liabilities, with the potential expiration of the 199A deduction alone poised to elevate some farms' tax obligations by up to 20%.

The stakes are high, and the farming community is encouraged to take a proactive stance. By understanding the impending changes and engaging in dialogue with policymakers, farmers can illustrate the real-world implications of such tax increases on their livelihoods and the broader agricultural landscape.

Sharing personal narratives with legislators is a powerful strategy to underscore the importance of these tax provisions, aiming to secure a favorable outcome that extends beyond 2025. The agricultural sector's resilience hinges on such critical legislative support, making the fight against these tax hikes a pivotal battle for the future of family farming in America.

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