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Tax reform proposals a mixed bag for farmers

Tina Barrett with Nebraska Farm Business Inc.

A farm business specialist says tax reform changes proposed by President Trump could be a mixed bag for farmers and ranchers.

Tina Barrett with Nebraska Farm Business Inc. says one positive change would be a new tax rate for small businesses.

“They’re talking about capping the maximum rate for business income—so what we get from a Schedule F or from partnership or an S Corp—at 25 percent,” Barrett says. “For a lot of our profitable operations, that would be a huge benefit in knowing that anything that’s going to be on Schedule F is not going to be taxed higher than 25 percent.”

Trump has also proposed eliminating the estate tax. But Barrett says if it means the step-up in basis is also eliminated, that would have a negative impact.

“If that (the step-up) goes away, then all of a sudden it becomes an impact for every operation instead of just those with really high net worth,” she says. “If there was a way we could eliminate the estate tax and keep the step-up in basis, that would be a perfect world. But in understanding the financial part of this, that’s probably not a reality.”

Barrett says there is also talk of eliminating the interest deduction for all businesses, which would hurt farmers and ranchers.

Barrett says while many aspects of the proposed reforms will benefit farm taxpayers, a lot of compromising will take place before any of the changes become law.

Link to article authored by Barrett

AUDIO: Tina Barrett

  • I believe not having a step up in basis is better than a inheritance tax. They will only get taxed if they decide to sell which is no different than if the deceased decided to sell. We can’t have our cake and eat it too. Just saying!

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