Ag Policy Blog

Sen. Cindy Hyde-Smith, R-Miss., has introduced the HERITAGE Act, "Helping Ensure Rural Inheritance Transfers Are Generationally Enduring" Act.

The bill would increase the limits under Section 2032A by raising the level of qualified farm property for estates from $750,000 to $15 million. Under Section 2032A, land value can be based on the actual use of farming rather than its fair market value.

"Tax concessions set almost 50 years ago to help sustain family farms don't work in today's world. It's heartbreaking to see a grieving family forced to sell off assets, portions of their farmland, or lose their farm entirely to cover federal estate taxes. The loss of working farm and range lands is just as damaging for production and the economic vitality of rural communities," Hyde-Smith said. "It's time to modernize the Internal Revenue Code to give heirs a fighting chance to carry on the proud American tradition of passing down family farms through generations."

As DTN noted, the current Section 2032A cap is $1.42 million because the cap has increased in value because of inflation, but the provision hasn't kept up with the growth in land values.

Raising the cap to $15 million would essentially provide farmers and ranchers with as much as double the estate-tax exemption under the budget reconciliation bill.

Under the 2017 tax law, the current estate tax asset exemption is $13.99 million for single people and $27.98 million for married couples. The budget reconciliation bill raised the single exemption to $15 million and the asset exemption for married couples would go to $30 million. Increases to the estate-tax exemption later on would be tied to inflation.

Keep in mind, the estate tax is much broader than agriculture. Farm assets generated just under $650 million in estate taxes in 2022, the last year data is available, out of $22.5 billion paid by estates overall. Fewer than 3,200 estates nationally paid estate taxes in 2022 with 379 of those estates reporting farm assets. Most of the assets tied up with estates involve stocks, bonds and other real estate.

Also see, "A Few Tax Notes From Reconciliation: Is the Estate Tax Missing a Piece for Farmers?," https://www.dtnpf.com/…

WHOLE MILK BILL ADVANCES

The Senate Agriculture Committee on Tuesday advanced the Whole Milk for Healthy Kids Act.

An issue for dairy farmers, the bill would give schools the option of serving whole milk and 2% milk in school lunches. Since 2013, schools have been limited to buying 1% milk and fat-free milk.

A similar bill was approved by the House Education and Workforce Committee on Feb. 12.

The House passes a similar bill in 2023, but it failed to get a vote in the Senate.

"The Whole Milk for Healthy Kids Act is about making informed, science-backed decisions that prioritize the health and future of our children," said Gregg Doud, president and CEO of the National Milk Producers Federation.

The bill also includes a provision that would allow schools to offer non-dairy products to substitute for milk as well. This would give options for children who are lactose intolerant.

Chris Clayton can be reached at Chris.Clayton@dtn.com

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