Congress may be on a break, but the agenda is packed once elected leaders return to Washington, D.C. next week. Both the House and Senate have versions of tax reform that are trying to survive the budget hatchet in Washington.
However, it’s the massive tax overhaul that are drawing mixed reactions from agriculture. Farm CPA Paul Neiffer says the Senate version includes a dedication that will apply to most farmers, in the form of a 10 to 20 percent reduction in their tax bill. The House’s version is different.
“Over on the House side, the lower income farmers and the higher income farmers will see a reduction,” said Neiffer, a CPA for CliftonLarsonAllen. “The ones that are in the middle—that $100,000 to $200,000 range—they're actually going to see their tax bill potentially go up almost 10 percent. So, there are going to be winners and losers anytime you're dealing with legislation like this.”
Neiffer says overall, the tax reform proposals are fairly good for agriculture, including possible changes to the current estate tax.
“For sure we're seeing a double in the exemption from the current $5.6 million next year to $11.2 million,” said Neiffer.
The House’s version calls for eliminating the estate tax entirely by 2024. However, it’s that piece that may not survive the mark-up process.
“I guess if I was a betting person, I'd bet it's more likely that it gets doubled rather than it gets repealed just from the perspective of what is the cost,” said Mary Kay Thatcher, senior director of congression relations with American Farm Bureau.
Neiffer says even if the estate tax isn’t repealed, any changes to the tax probably won’t be permanent, so farmers and ranchers should consider taking action soon.
“If we get a change in the White House, a change in Congress it may not even last 10 years, so if this goes through, I would certainly recommend the farmers in that higher bracket make some gifts, you know get rid of those assets as quick as you can,” said Neiffer.