Nebraska Farm Bureau is encouraging farmers and ranchers to examine how they could benefit from changes in the federal tax code as the end of the year approaches. In December of 2017, Congress passed, and President Trump signed the most sweeping changes to federal tax code in more than 20 years. Those changes could yield significant benefits to farm and ranch families according to the Nebraska Farm Bureau.
“The adoption of the Tax Cuts and Jobs Act (TCJA) helped lower taxes for hardworking Americans. As part of that effort, Nebraska Farm Bureau worked very closely with Nebraska’s Congressional delegation to ensure reforms included improvements in the tax code for farm and ranch families,” said Steve Nelson, Nebraska Farm Bureau president, Nov. 13.
To help farmers and ranchers navigate the changes, Nebraska Farm Bureau has developed a guide entitled “5 Things to Remember: Federal Tax Code Changes for Farmers and Ranchers.” The guide is intended to aid farmers and ranchers as they do tax planning at the end of the year.
“The first thing to note is that there are new tax brackets with lower tax rates across the board. How an individual farmer or rancher will be impacted will be based on how their operation is organized, but most situations will result in a tax reduction,” said Jordan Dux, Nebraska Farm Bureau director of national affairs.
Dux also encouraged farmers and ranchers to make sure they examine the new capital investment rules.
“It’s important to note that the updated tax code increased the maximum deduction that can be taken under the Section 179 small business expensing provision. This provision allows small businesses to deduct capital investment purchases (like a tractor, combine, etc.) from their income taxes. The new law also allows farmers and ranchers to fully and immediately write off business investments for used as well as new purchases. These provisions provide tax reductions and incent capital investment in an individual’s farm or ranch,” said Dux.
The new tax code also doubles the base estate tax exemption from $5 million to $10 million, a win for farmers and ranchers who oppose the “death” tax. The measure also repeals the individual health insurance mandate of the Affordable Care Act (commonly known as Obamacare) by removing the penalty for individuals who do not purchase health insurance, and maintains the deduction of medical expenses for those who itemize deductions.
“While there are several changes, farmers and ranchers will find some of the most important parts of the of updated tax code to be what was maintained from the previous code, specifically the ability for farmers and ranchers to fully deduct their property taxes on agricultural land and business properties, as well as the ability to deduct business interest on loans,” said Dux.
Dux encourages farmers and ranchers to use the guide but says individuals should always consult a tax professional to fully examine how the changes could impact an individual’s farm or ranch operation.
The guide, “5 Things to Remember: Federal Tax Code Changes for Farmers and Ranchers,” is available on the Nebraska Farm Bureau website at www.nefb.org.