BACKGROUND
Beginning January 1, 2011 the estate tax exemption will be lowered to $1 million and a tax rate of 55% above the exemption. This is a significant decrease from the most recent ceiling of $3.5 million and the 45% tax rate above the exemption.
What does this mean for your family? If you or a member of your family dies, and the estate is valued at more than $1 million, you could owe the federal government 55% of the value of the estate above the exemption. How would you pay those taxes?
Congress has until the end of 2010 to create a permanent fix to estate taxes, however, with an election in November, it is important that an estate tax solution is negotiated and resolved as soon as possible.
STATUS
To date, the U.S. House has passed a permanent fix which resembles the previous estate tax exemption of $3.5 million and a 45% tax rate above the exemption.
The Senate Finance Committee is currently considering another proposal which would increase the exemption to $5 million and a 35% tax rate above the exemption.
Farm families are greatly affected by estate taxes because of the ever-increasing land, implement and infrastructure costs associated with the business operation. The next-generation of family members who plan to take over a farming operation are directly impacted by the estate tax exemption and the tax obligations. Estate taxes influence the sale of land which can interfere with the orderly transfer of farmland to the next generation of farmers.
FACTS
• Individuals, family partnerships or family corporations own 98 percent of our nation’s 2 million farms and ranches.
• Estate taxes threaten family-owned farm and ranches and the livelihoods of families who make their living in production agriculture.
• It takes two and half years of farm income for a moderate-sized farm operation to pay off the Estate Tax owed.
ESTATE TAXES MUST BE IMPROVED FOR ALL FARMERS!
TAKE ACTION!
Tell the American Farm Bureau about your farming operation:
• How does a $3.5 million exemption impact you?
• Are you better served with a higher exemption?
• What if the exemption shrank to $1 million?
• Are you looking to expand your operation or buy a farm, and cannot?
• Has your farm been affected by Estate Taxes, either because of a death in your family or by the high costs of estate planning?
AFBF will help share your story with members of Congress to give them a better understanding of the impact of their vote on your family farm – and their constituent!
Click here to share your story!