Multiple agricultural groups have announced their support of the bipartisan Preserving Family Farms Act of 2021. Sponsored by Representatives Jimmy Panetta and Jackie Walorski, the legislation seeks to ease some of the burdens of the estate tax. The bill updates the special use valuation provision of the estate tax. The amount of property that can be appraised as farmland instead of commercial development would be increased. Industry groups have heralded the legislation as an important step towards protecting family farmland.
“Estate taxes can have devastating consequences on family farms. The special use valuation is an important tool to help farmers and ranchers navigate the difficult process of estate planning,” American Farm Bureau Federation President Zippy Duvall said in a press release. “Next-generation farmers and ranchers should be able to pay based on the actual use of the land, rather than its potential value as commercial property such as an office or warehouse.”
Commonly referred to as the ‘Death Tax,’ the estate tax has been a consistent issue for family farmers. It has presented financial challenges when making plans for the future of their farmland. Protections under Section 2032A of the Tax Reform Act of 1976 have failed to keep pace with the increasing value of farmland. The Preserving Family Farms Act increases the maximum exemption amount from $750,000 to $11 million. The National Cattlemen’s Beef Association (NCBA) believes the legislation could provide a permanent solution for struggles related to estate tax.
“America’s farmers and ranchers deserve certainty in the tax code overall, and they need certainty especially when it comes to the estate tax. Without it, transition planning for the next generation of producers is nearly impossible,” NCBA President Jerry Bohn said in a news release. “We thank Representatives Panetta and Walorski for their leadership and dedication to protecting future generations of agricultural producers through the introduction of the Preserving Family Farms Act of 2021.”