Thursday, December 21, 2017
Farm Bureau analysis shows farmers will pay a lower effective tax rate.
Congressional support for the tax bill came largely down party lines.
By Deana Stroisch
Calling it “long overdue,” Illinois Farm Bureau President Richard Guebert Jr. said the tax reform bill signed into law will benefit agriculture.
“This is a good bill for farmers and ranchers,” Guebert said. “Provisions including across-the-board cuts in individual tax rates and relief for ‘pass-through’ small businesses will enable most farms to reinvest and grow their business.”
An economic analysis of the bill by American Farm Bureau Federation shows farmers of all sizes, and with different levels of off-farm income, will pay a lower effective tax rate.
President Donald Trump is expected to sign the bill – the first comprehensive tax reform passed in more than three decades. U.S. Ag Secretary Sonny Perdue called it a “once-in-a-generation reform” and “an eagerly awaited Christmas present for taxpayers.”
“Having traveled through our nation’s heartland for most of this year, I know that the hard-working, tax-paying people of American agriculture need relief,” Perdue said.
Congressional support for the tax bill came largely down party lines. U.S. Reps. Peter Roskam, R-Wheaton, and John Shimkus, R-Collinsville, served on the conference committee. On Tuesday, the House voted 227-203 to adopt the conference report. Later that night, the Senate adopted the report by a vote of 51-48.
The House had to vote on the tax deal again Wednesday after the Senate amended the bill to fix some technical issues.
Hundreds of IFB members sent last-minute emails to members of Illinois’ congressional delegation, encouraging them to support the legislation.
The Tax Cuts and Jobs Act of 2017 will, among other things:
- Double the estate tax exemption until Dec. 31, 2025, while retaining stepped-up basis.
- Double the standard deduction to $12,200 for individual filers and $24,400 for those filing jointly through 2025. AFBF President Zippy Duvall noted that 94 percent of farmers and ranchers pay taxes as individuals.
- Establish a flat, 21 percent corporate rate. Current rates: 15 percent, 25 percent, 34 percent and 35 percent.
- Allow individuals operating pass-through businesses to deduct 20 percent of their business income through 2025. Trusts and estates also will be eligible for the deduction.
- Expand Section 179 small business expensing to $1 million per year and allow immediate 100 percent depreciation for five years.
- Continue the business deduction for property taxes for real estate and personal property taxes on farm business assets.
- Continue like-kind exchange deduction for buildings and land. Ends the deduction for equipment and livestock.
- Shorten the depreciation period for farm equipment and machinery to five years from seven.
“We look forward to President Trump signing this bill,” Duvall said. “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.”
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