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☛ Tax reform to benefit farmers and ranchers 1-4-18

TAX REFORM PACKAGE TO BENEFIT FARMERS AND RANCHERS

Jan. 4, 2018

According to Zippy Duvall, the President of the American Farm Bureau Federation, “The tax reform package passed by Congress this week will result in lower taxes for the vast majority of farmers and ranchers. This tax overhaul includes many changes to the tax code, most notably lower individual tax rates that will benefit farmers and ranchers. Ninety-four percent of farmers and ranchers pay taxes as individuals and those rates are coming down. The bill also maintains all of the important deductions and credits that farmers rely on. So, thanks to a lot of hard work by Congress and the administration, farmers will have both lower rates and all the tools they’ve always had to manage their businesses.

“Starting next year, farmers and ranchers will also be able to take a 20 percent deduction off their business income. That’s new, and it will reduce the taxes farmers owe. The bill also doubles the estate tax exemption to $11 million per person, which will provide relief to the vast majority of farmers and ranchers. We look forward to President Trump signing this bill. Most of the provisions in this tax bill are temporary, lasting for only seven years, so Farm Bureau will now focus our work on making those important tax deductions, lower rates and the estate tax exemption permanent.”

According to Michael Clements of the American Farm Bureau Federation, “Congress is providing farmers and ranchers with a last-minute holiday gift: lower taxes in the future. A tax code overhaul passed by both the House and the Senate this week makes many changes to the tax code that will benefit farmers and ranchers.

New to the tax code, the bill includes a deduction for business income. Also, the estate tax, long opposed by the Farm Bureau, should no longer be a factor for most farmers and ranchers following changes to the estate tax exemption.

American Farm Bureau Federation tax specialist Pat Wolff says the bill includes lower individual tax rates.  “We know that 94 percent of farmers and ranchers pay taxes as individuals and the one tax rates are coming down. The bill also maintains all of the important deductions and credits that farmers rely on. So, farmers have all the tools that they’ve always had to manage their business.

“Starting next year, farmers and ranchers will be able to take a 20 percent deduction of their business income. So if they made $200, they’ll be able to take a $2 deduction. That’s new and will also help reduce the taxes that are owed.

“The bill doubles the estate tax exemption to $11 million per person. At that level, the vast majority of farmers and ranchers won’t have to worry about the estate tax anymore. Most of the provisions are temporary, they only last for seven years. So starting this year, Farm Bureau will be working to make those  important tax deductions the lower rates and the estate tax exemption permanent.”

Also, a recently introduced bill would continue several expired tax provisions important to farmers and ranchers. Offered by the Senate Finance Committee Chairman Orrin Hatch (R-Uah), the Tax Extenders Act of 2017 (S.2256) would extend several tax credits biodiesel, renewable energy and for short line railroads. Most of the credits expired in 2016.

In a recent letter to House and Senate leaders urging them to pass legislation extending these key provisions, the American Farm Bureau Federation and more than 55 other organizations explained that these expired provisions impact sectors vital to the U.S. economy and support tens of thousands of jobs nationwide.

“Acting to extend these expired tax provisions will allow businesses and individuals to make important planning decisions. Allowing these provisions to remain lapsed creates confusion in the marketplace and effectively increases taxes on entities that create jobs and economic growth,” the groups wrote.

House and Senate tax writing committees are expected to work on tax extenders in January.

  • The Tax Extenders Act of 2017 would continue the following Farm Bureau-supported tax provisions, most of which expired in 2016, for 2017 and 2018:
  • The $1.01-per-gallon income tax credit for cellulosic biofuel
    The $1.00-per-gallon biodiesel and renewable diesel tax credits for biodiesel and blending biodiesel
  • The 10-cents-per-gallon Small Agri-Biodiesel Producer Credit
  • The $1.00-per-gallon biodiesel excise tax credit that can be taken against fuel taxes The 30-percent investment tax credit for installing alternative vehicle refueling property
  • The 2.3 cents-per-kilowatt hour Production Tax Credit for energy from closed-loop biomass and the 1.2 cent-per-kilowatt- hour credit for closed-loop biomass
  • The option of taking an investment tax credit in lieu of Production Tax Credit (Currently, it’s 24 percent for 2017, 18 percent for 2018, 12 percent for 2019 and expires in 2020.)
  • The investment tax credit for installation costs of facilities that produce electricity from wind (Currently, it’s 24 percent for 2017, 18 percent for 2018, 12 percent for 2019 and expires in 2020.)
  • The Distributed Wind Investment Tax Credit for electricity production facilities The 50-percent Railroad Track Maintenance Credit for short line railroads
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