Farm Tax Breather
Lawmakers on both sides of the aisle have been concerned about the implications of stepped-up basis on U.S. farms proposed in President Biden’s America’s Family Plan. But now it seems everyone can take a breather.
This week, the House Ways and Means Committee unveiled a new plan that excluded the transfer tax and left intact the “step-up in basis” (a rule allowing an appreciated asset’s value to be reset to the fair market value at the owner’s death).
That’s after the National Farmers Union (NFU) released a letter late last week urging Congress to preserve the rule, with other farm groups agreeing.
Tax translation: Family farmers and ranchers can rest easier if this plan moves forward as it’s more favorable to their interests. Essentially, if there’s a death, the family won’t have to $hell out a mint in transfer taxes to continue the farming operation. But dairy farmers and larger farms may have to pay more, and the Senate verdict is still outstanding.
Break it down: Positive changes to the House plan include the tax rate dropping for “C Corporation” farms, an increase in estate tax exclusions, and replacing an extra 12.4% self-employment tax with a 3.8% net investment income tax.
The Senate is still working on its tax proposal, so this House plan is only the first step. Because the only certainties in life? Death, taxes, and political back-and-forth about taxes.