Just in time for Christmas and the New Year, President Donald Trump signed the Republican tax-overhaul bill—a $1.5-trillion package.
“I consider this very much a bill for the middle class and a bill for jobs,” said Trump to reporters in the Oval Office before signing the legislation.
The legislation hasn’t scored well in national polls, though, in part because of benefits to corporations and top earners. But the president and other Republicans say average Americans will embrace it and benefit.
I sure hope they’re right.
We conducted our own survey in mid-December to get a sense of what farmers think of what was then the proposed tax package and got a mixed bag of results. See below.
To learn more about what the now-approved tax bill means, we checked in with tax expert Paul Neiffer. He shares these highlights:
- The corporate tax rate is now 21% down from 35%. Most farmers pay 15%, Neiffer says, so this might be an adjustment higher for some.
- Farms can fully deduct all farm assets purchased between Sept. 28, 2017, and Dec. 31, 2022.
- Section 179 is bumped to $1 million beginning in 2018 with a phase-out starting at $2.5 million.
- There’s almost an automatic 20% deduction for net farm income.
- The tax plan doubles the lifetime estate tax exemption to $11.2 million starting in 2018, and most farmers will be able to deduct all of their interest expense.
- Net operating losses can only be carried back two years and can only offset 80% of income going forward.
- Meals are only 50% deductible for farmers who provide them to employees on-site, and that will drop to zero beginning in 2026.
All-in-all, Neiffer notes he would give this tax package a “B” grade. “It could have been better, but it is likely better than our current tax laws for most farmers,” he says. Sit down with a tax professional, he advises, to find out what the changes mean to your specific operation.
Neiffer and our staff will be addressing more tax provisions in the months ahead. Keep an eye on the details in Farm Journal and Neiffer’s blog, The Farm CPA, at www.AgWeb.com/blog/the_farm_cpa_243.