August 31, 2023

Interpretive Summary: Preserving Family Farms Act reintroduced

Preserving Family Farms Act reintroduced

By: Sydney Sheffield

United States Representatives Jimmy Panetta (D-CA) and Mike Kelly (R-PA) have reintroduced the Preserving Family Farms Act of 2023. The bill would modify tax law, allowing farmers and ranchers to pay estate taxes based on the value of their land for agricultural use. A similar bill was previously introduced but did not survive the Ways and Means Committee. 

“America’s cattle producers deserve certainty in the tax code, especially when it comes to succession planning. The National Cattlemen’s Beef Association (NCBA) is committed to fighting for common sense tax solutions, including the expansion of IRS Code Section 2032A Special Use Valuation, to allow more producers to secure greater relief from the estate tax and preserve family-owned cattle operations for generations to come," said NCBA President Todd Wilkinson. "We applaud Representatives Panetta and Kelly for their leadership and dedication to protecting future generations of agricultural producers through the introduction of the Preserving Family Farms Act of 2023.”

Specifically, the bipartisan bill would expand IRS Code Section 2032A to allow cattle producers to take advantage of the Special Use Valuation and protect family-owned businesses from the devastating impact of the federal estate tax, commonly referred to as the Death Tax. In the Tax Reform Act of 1976, Congress recognized the disproportionate burden of the Death Tax on agricultural producers and created Section 2032A to help farmers keep their farms. However, the benefits of Special Use Valuations have been stymied over the years as the cap on deductions has failed to keep pace with the rising value of farmland. 

While the current 2032A reduction is 55% higher than the value established, The United States Department of Agriculture (USDA) estimates that cropland values have increased by 223%. In addition, agricultural land values have by 241% during this same period. NCBA feels that due to the rapid inflation of farmland values, the 2032A deduction is no longer aligned with the needs of modern agriculture, nor does it accomplish Congress’ intended goal of providing meaningful protection to those producers who are most vulnerable to the estate tax.

“Families shouldn’t be forced to sell off or split up their farm that has often been in their name for generations,” Kelly said. “To support the next generation of American farmers, we must do everything we can to ensure that family farms aren’t burdened with a sky-high estate tax should a loved one pass away. This bill will go a long way toward helping hardworking folks stay on their land in their time of need and for generations to come.”

The Preserving Family Farms Act has been endorsed by Texas Farm Bureau, American Farm Bureau Federation, National Cattlemen’s Beef Association, and several other farm and ranch groups.