An enhanced estate tax exemption, introduced under the 2017 tax reform law, may soon shrink if that law is allowed to expire at the end of 2025. If Congress does not extend the Tax Cuts and Jobs Act, the current exemption of $13.6 million per individual will revert to its previous level of $5.5 million.
Ken Bacus of the National Cattlemen’s Beef Association (NCBA) discussed this issue during a recent Farm Foundation panel. According to Bacus, nearly two-thirds of surveyed cattle producers could feel the effects of a lowered exemption.
“If we do see limits revert back to those pre-2017 levels, then that’s going to affect about 61 percent of our survey respondents,” Bacus said. “And that is not something that we take lightly.”
Bacus also pointed out that many producers have already faced the estate tax in the past. “A third of our respondents have already had to pay the death tax once, and from that number, another 35 percent have had to pay it more than once,” he noted.
One major challenge is that most farm and ranch operations are considered “asset-rich but cash-poor.” High land values are a significant factor. “Whether it’s pasture land or farmland, demand for development is always a constant pressure,” Bacus explained. “So, it’s not just that we’ve been setting record values on cattle prices and everything else—it’s the land values that have gone up.”
As lawmakers debate the future of the 2017 tax law, producers across the country are keeping a close eye on any changes that could affect how family-owned farms and ranches are passed down to the next generation.