New Fed. Estate Tax Could Affect Farm Inheritance

Changes to the federal estate tax, set to take effect January 1, could make it costlier for those hoping to keep a farm in the family.

Right now people who inherit a farm only have to pay federal estate taxes if the property is worth more than $5 million. If Congress does nothing starting on January 1, the exemption drops to $1 million. Karen Gufvert is the director of governmental relations for the Wisconsin Farm Bureau Federation. She says the change means a lot of farmers will be paying more for inherited property, “The estate tax reform would definitely impact 98 percent of farmers through the nation, and that would be equivalent to two million farms.”

Also on January 1, those who find they must pay estate taxes on a farm they’ve inherited will pay more. The tax rate on assets will grow from 35 percent to 55 percent. Elk Mound farmer Jim Holte says the increase will force those in his line of work to make some tough decisions, “When you have a business that’s capital intensive owning property and livestock and buildings when an owner dies, when it tries to be passed onto the family the estate tax could very quickly and force that family to sell assets to come up with that cash.”

Congress could act to keep federal estate tax exemptions where they are now.But it’s unclear if they will do so. The exemptions that are set to expire are part of Bush era tax cuts. President Obama extended the cuts in 2010.