Estate Tax Considerations and Upcoming Potential Changes to Know Now

The estate tax exemption – deemed by many “the death tax”— has risen and fallen in the last 25 years. Currently in 2022, the exemption sits at $12.06 million and a spouse can now elect to receive the unused portion of a spouse’s exemption. If one spouse passes with $7 million in assets, their surviving partner can expand to include the unused $5.06 million. Ultimately, this means most farmers do not have to worry about estate taxes.

However, for those farms (roughly 1% of U.S. farms) where the tax is applicable, it can be rather burdensome. The Tax Cut and Jobs Act of 2018 doubled the estate tax exemption through the end of 2025. Meanwhile, the Build Back Better Act of the Biden Administration would call for the estate exemption to come back down to $5 million, indexed for inflation effective January 1 of this year. While most farms will likely not owe federal estate taxes, most will owe state estate taxes.

Read more on estate tax and important considerations every farm should be aware of here.