Tax Policy

The Tax Aggie Coalition sent a letter, signed by 41 national and regional agriculture organizations, to House and Senate leadership to express significant concerns about legislative proposals that would jeopardize the future of family-owned farm and ranch businesses.

As members of Congress work to implement President Biden’s American Families Plan, the coalition urges lawmakers to enact commonsense policies that preserve a sustainable and vibrant business climate for rural America through the preservation of long-standing tax code provisions. These provisions are fundamental to the financial health of production agriculture and the businesses that supply its inputs, transport its products, and market its commodities.

With more than 370 million acres expected to change hands in the next two decades, the policies Congress enacts now will determine agricultural producers’ ability to secure affordable land to start or expand their operations. In the letter to Congress, three critically important tax provisions were highlighted.

Stepped-Up Basis: Assets in agriculture are typically held by one owner for several decades, so resetting the basis on the value of the land, buildings, and livestock on the date of the owner’s death under a step-up in basis is important for surviving family members and business partners to ensure the future financial stability of the operation.

Like-Kind Exchanges: This provision allows businesses to buy and sell like assets without tax consequences, thus helping farmers and ranchers, who are typically “land rich and cash poor,” maintain cash flow and reinvest in their businesses.

Sec. 199A Business Income Deduction: In order to maintain a reasonable level of taxation for pass-through businesses, like farms and ranches, it is critical to preserve Sec. 199A business income deduction.

“The agriculture industry is the backbone of many economies in rural America. When considering how to offset the cost of a comprehensive infrastructure package, it is essential that Congress preserve sound tax policies for our nation’s farmers, ranchers, and family-owned agribusinesses,” said NCBA CEO Colin Woodall. “Ultimately federal tax policy should help facilitate agricultural land transfer, not be a hinderance to that process. It's critically important that the policies Congress enacts now continue to allow the next generation—including beginning, veteran, and minority farmers and ranchers—to be successful.”

“Farmers and ranchers already face uncertainties with unpredictable weather and fluctuating markets. A sound tax policy should help them navigate those challenges, not add to the confusion,” said American Farm Bureau Federation President Zippy Duvall. “Generations of farmers have relied on important tax provisions like stepped-up basis and like-kind exchanges to grow their family-owned businesses and eventually pass them on to the next generation. Congress should refrain from creating tax rules that will make it harder for farms and ranches to stay viable for families now and for those that come after them.”