2021 Federal Estate and Transfer Tax Law Proposals
This year has brought many proposals to Congress that would dramatically change the tax implications for many farm businesses.
For the last 20 years, the battle over estate taxes has centered around the elimination of the estate tax (and the accompanying step up in basis) and the amount of the federal exclusion amount. There have also been small moves in the percentage of tax but that’s a small consideration when compared to the other issues. This year, the focus has moved away from making changes to the federal estate taxes and has centered mostly on adding a “transfer tax” and increasing the rate of the capital gains tax.
It’s important to remember that this new transfer tax does not replace the estate tax but adds to it. So, a family could end up paying both a transfer tax and then an estate tax and, with the exclusion set to return to a level somewhere around $6 or $7 million, many farms would be subject to both.
In this article, Tina Barrett, director of Nebraska Farm Business, Inc., reviews the proposals and their potential impact on Nebraska ag.