One of President Donald Trump’s first-term achievements was a major tax cut, which he signed into law in 2017. The Tax Cuts and Jobs Act largely benefited the wealthiest families in the U.S.
But farm households also saw their tax rates decrease.
That means many farms will see their tax liability increase when the tax cuts expire at the end of the year, according to U.S. Department of Agriculture research.
Congress could extend the tax cuts through legislation, and Trump has said he wants more changes to the tax code.
If the tax cuts do expire, which is scheduled for midnight on Dec. 31, 2025, farm households of varying sizes would be affected in different ways.
Child tax credit
For instance, fewer farm households would receive the Child Tax Credit. The 2017 law temporarily increased this credit and raised the income threshold for eligibility. Under the current law, about 36% of all farm households are eligible for the tax credit. When the law sunsets, about 27% of farm households will be, according to USDA research.
The tax credit amount will also decrease. Currently, farm households have an average credit of about $3,800. Unless Congress acts, it could be about $1,300.
Qualified business income deduction
Another 2017 tax cut that farmers were eligible for was the qualified business income deduction.
It is for businesses that are not organized as C-corporations, which allows owners and shareholders to separate their tax liability from that of the corporation (such as publicly traded corporations). The new deduction was intended to “provide parity with C-corporations” for farms and other businesses, according to the USDA.
Almost half of farm households receive the deduction. If the deduction is eliminated, the farms’ average tax bill would increase by 9%, or about $2,500.
Estate tax
Another part of the tax cut that could sunset is the provision related to the estate tax, which applies to the transfer of property after a relative dies. The tax only affects the wealthiest families in the U.S. and has become a persistent target of Republicans, who have labeled it the “death tax.”
Though implemented in 1916, the estate tax has “never directly affected a large percentage of farmers,” USDA researchers wrote.
USDA researchers estimate that, currently, just 0.3% of all farm households would be eligible to pay the estate tax. If this part of the 2017 tax cut expires, though, 1% of all farm households would be eligible.
This mostly affects the largest U.S. farms, which generate more than $1 million in annual gross income.
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