The U.S. House of Representatives supports farmers and small businesses with their recent pass of a permanent ag tax. They passed a Farm Bureau-supported legislation that makes several important tax reform provisions, which would have expired after 2025. The now permanent bill, Protecting Family and Small Business Tax Cuts Act of 2018, is one of a three-bill package known as “Tax Reform 2.0.” The three-bill package addresses bonus depreciation and the estate tax along with other provisions, which are headed to the Senate for a vote.
According to Michigan Farm Bureau National Legislative Counsel, John Kran, the newly passed legislation grants farmers certainty by making the tax reform measures permanent, which could positively benefit Michigan farmers when it comes to making long-term business decisions such as estate planning and capital purchases. Unlimited bonus depreciation and direct expensing would be a permanent fixture for farmers, under the new legislation.
“While the tax reform passed nearly a year ago was beneficial for Michigan farmers, one of our biggest concerns at the time was that not all of the provisions were made permanent – meaning we’d need to ask Congress to reinstate them in a few years,” Kran said. “We appreciate Michigan Congressman Mike Bishop’s role as a member of the House Ways and Means Committee that wrote the bill in addressing that concern.”
The legislation makes the following provisions that are particularly important to agriculture permanent:
- Reduced pass-through tax rates and expanded brackets
- The Section 199A new 20 percent business income deduction
- Unlimited bonus depreciation (expensing)
- The doubled estate tax exemption ($11 million person/$22 million couple)
- The increased alternative minimum tax threshold for individuals
If the bill passes, Rep. Bishop (MI-08), said Tax Reform 2.0 will lock in middle class and small business tax cuts, promote family savings, and advance the next generation of entrepreneurs. He credits the original tax reform which generated new jobs and boosted wages.