Tax deals OK'd
Compromise deals on federal estate taxes and capital gains were included in the "fiscal cliff" legislation Congress passed New Year's Day.
Without the deal, estate taxes were set to increase from 35 percent to 55 percent. The value of property exempt from estate taxes would also have dropped from $5 million to $1 million.
Congress has now decided to keep the $5 million exemption level but will increase the estate tax rate to 40 percent, said Dale Moore, deputy director of public policy for the American Farm Bureau Federation.
Prior to the agreement, uncertainty about the estate tax prompted some farmers to speed up transferring property to their heirs to avoid the higher rate.
Other farmers decided to sell off property before higher capital gains taxes were implemented. While the capital gains tax will increase in 2013, the change won't affect everyone.
The capital gains rate will increase from 15 percent to 20 percent, but people with annual income below $400,000 will continue to be taxed at the 15 percent level, Moore said.
"That is definitely a win," he said. "Most farmers aren't going to have their individual income above that level."
-- Mateusz Perkowski