Few Farms Could Survive Proposed Tax Policy Changes

COLLEGE STATION, TX – Republican leaders of the Congressional agriculture committees (Rep. G.T. Thompson and Sen. John Boozman) unveiled a report they commissioned, looking at the effects of certain tax changes on family farms nationwide and the results are staggering.

According to the Agriculture and Food Policy Center (AFPF) at Texas A&M, under current tax law, a farm that passes from a principal operator to an heir at death will impact 2 percent of farms and ranches nationwide, based on the Center’s 94 representative farms in 30 different states.

A common concern right now among ag groups is the possible elimination of stepped-up basis and even with a $1 million exclusion, this policy change would impact 98 percent of farms (92 of 94 AFPC representative farms). The effect would be an average tax liability of more than $726 thousand per farm. AFPC says the change would hit every ranch and dairy in their study.

Another possible change is the lowering of the exemption levels for the estate tax, whereby the non-partisan report says it would affect 41 percent of row crop operations, but 50 percent of dairies and ranches, with an average tax liability of $2.17 million per operation.

If both of these changes were combined, AFPC 98 percent of all operations would incur an average additional tax liability of $1.43 million and an average loss in ending cash balances of all affected farms or almost $1.6 million in 2026.

AFPF Co-Director Dr. Joe Outlaw called this “one of the most serious policy analyses we’ve done (and) would be a significant hurdle for this country’s family farms to overcome”.
(SOURCE: All Ag News)