Apr 29, 2025

Farm Bureau warns of estate tax farm threat

The cost of inheriting the family farm will increase dramatically at the end of the year if Congress doesn’t take steps to extend the elevated estate tax exemption, according to a news release from the American Farm Bureau Federation (AFBF).

AFBF economists analyzed the estate tax cliff in a late April Market Intel report.

“Just last year, USDA estimated that if the estate tax exemption reverts to its pre-Tax Cuts and Jobs Act level, nearly twice as many farms in every sales class would have to pay estate taxes,” the Market Intel report stated. “The average net worth of farms subject to the estate tax would be lower under the permanent exemption level — falling from $32.5 million at the higher exemption to just under $20 million, meaning more smaller farms would be impacted.”

Low sales farms, ones that have a farmer whose primary job is farming but sustain an average loss of more than $5,700 a year, would see the sharpest fall in net worth, going from $42.5 million to only $19.5 million, according to the report.

While these may seem like big numbers, most of the value of a farm is tied up in land and expensive machinery, which are needed to grow food and raise animals. More than 80% of an average farm’s assets are in real estate alone. Actual cash on hand is much lower, making payment of such taxes extremely difficult or even impossible, according to a news release.

“For many people, their farms are not just their businesses, but they are a family tradition passed down from generation to generation,” AFBF president Zippy Duvall said in the release. “If a family is forced to sell off its farm piece by piece just to pay estate taxes, they run the risk of eventually losing the farm altogether. We urge Congress to make the estate tax exemption permanent, to enable farm families to continue growing the food and fiber America’s families rely on.”

U.S. farms are closing and consolidating at an alarming rate. The latest Census of Agriculture shows more than 140,000 farms went out of business between 2017 and 2022. Another 20,000 farms have been lost in the past two years, according to USDA.