Publications

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  • Tax Policy Can Alter Farm Asset Investment Decisions

    Amber Waves, November 06, 2017

    Farming requires a substantial investment in assets such as barns, machinery, and equipment. Two IRS provisions, section 179 and bonus depreciation, allow farms (and all businesses) to deduct the cost of these assets in their first year of service. These deductions can be used together to accelerate the recovery of the asset’s cost, thereby reducing a farmer’s taxable income sooner than otherwise.

  • Farm Bill Income Cap for Program Payment Eligibility Affects Few Farms

    Amber Waves, August 01, 2016

    The 2014 Farm Act revised the maximum income limitations (the income caps) that determine eligibility for most commodity and conservation programs and payments by replacing the separate limits on farm and nonfarm income specified in the 2008 Farm Act with a single total adjusted gross income cap of $900,000.

  • Potential Implications of Health Care Reform for Farm Families

    Amber Waves, April 06, 2015

    The Affordable Care Act of 2010 (ACA) requires most U.S. citizens and legal residents to obtain health insurance coverage. Farm households with incomes between 138 percent and 400 percent of the FPL comprise 37 percent of the 1.61 million farm families. Some in this group are eligible for premium tax credits on a sliding scale.

  • Federal Income Tax Reform and the Potential Effects on Farm Households

    Amber Waves, February 21, 2013

    The elements common to many reform proposals--eliminating tax preferences, restructuring capital gains and dividend rates, lowering marginal rates, and reducing the number of tax brackets--could affect the well-being of farm households.

  • The Potential Impact of Tax Reform on Farm Businesses and Rural Households

    EIB-107, February 04, 2013

    Key elements of proposed tax reform, reducing accelerated deductions for capital purchases and raising capital gains tax rates, could increase tax liabilities for many farmers. Other elements could reduce tax liabilities.

  • Rural America Benefits From Expanded Use of the Federal Tax Code for Income Support

    Amber Waves, June 16, 2011

    Increased use of the tax code for policy goals has boosted incomes of rural taxpayers, who tend to have lower incomes and higher poverty than urban taxpayers.

  • Federal Tax Policies and Low-Income Rural Households

    EIB-76, May 05, 2011

    ERS examines the effects of current Federal tax provisions regarding low- and moderate-income households in rural America, focusing on the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC).

  • Federal Estate Taxes Affecting Fewer Farmers but the Future Is Uncertain

    Amber Waves, June 01, 2009

    The Federal estate tax affects relatively few estates and accounts for only a small share of total Federal tax receipts. Though special provisions have been enacted to limit the impact of the tax on farmers and small business owners, these groups are still more likely than the general public to owe Federal estate taxes. A larger share of farm estates could be subject to estate taxes if legislation enacted in 2001 is allowed to expire at the end of 2010.

  • Federal Tax Policies and Farm Households

    EIB-54, May 15, 2009

    Significant changes in Federal individual income and estate tax policies over the last 10 years have reduced average tax rates for farm households

  • Effects of Reducing the Income Cap on Eligibility for Farm Program Payments

    EIB-27, September 04, 2007

    Could a single program support farm income and encourage environmentally sound farm practices? ERS looks at some hypothetical program scenarios.

  • Changing Federal Tax Policies Affect Farm Households Differently

    Amber Waves, November 01, 2005

    Recent Federal tax legislation has reduced income tax rates for both individuals and businesses and cut the number of farm estates that owe Federal estate taxes. Commercial farmers are the primary beneficiaries of the reduced business and estate taxes.

  • New Tax Laws Benefit Farmers

    Amber Waves, April 01, 2005

    The American Jobs Creation Act of 2004 replaced an existing tax benefit for exporters with a new deduction for manufacturers, including farmers. The Act also modified other provisions that will provide farmers with increased flexibility with regard to the reporting of farm income.

  • How Will the Phaseout of Federal Estate Taxes Affect Farmers?

    AIB-751-02, March 14, 2004

    Concern among policymakers that the Federal estate tax might force the liquidation of some family farms has resulted in the enactment of a variety of special provisions over the years. Providing relief to farmers and other small business owners was the primary impetus for the 1997 changes to Federal estate and gift tax policies and a major objective of the 2001 law that will phase out and eventually repeal the Federal estate tax. While only about 4 percent of all farm estates owe Federal estate taxes, a much larger percentage of farm estates must file an estate tax return, make use of special farm provisions, alter their business practices, or engage in costly estate planning in order to reduce the impact of the estate tax on their farm business. Thus, the phase-out and repeal of the Federal estate tax will affect a much broader group of farmers than just those who owe tax.

  • Effects of Federal Tax Policy on Agriculture

    AER-800, April 16, 2001

    This report analyzes the effects of the current Federal tax code on farming. It is the first study that applies the ERS farm typology to tax data. The study was initiated by the USDA National Commission on Small Farms and also evaluates tax proposals to assist beginning farmers. Investment, management, and production decisions in agriculture continue to be influenced by Federal tax laws, although this influence may be less than in earlier decades.

  • Policy Issues in Rural Development: How Would Fundamental Tax Reform Affect Farmers?

    AIB-751-01, April 01, 1999

    The Food and Rural Economics Division of ERS designed the following series of policy-oriented, timely publications to provide background and analysis for decision makers and others.

  • The Taxpayer Relief Act of 1997: Provisions for Farmers and Rural Communities

    AER-764, July 31, 1998

    Under the Taxpayer Relief Act of 1997, most farmers will pay less Federal income tax, and farm families will find it easier to transfer the family farm across generations. The new law--the tax portion of 1997 legislation to balance the Federal budget by 2002--emerges from years of debate on proposals for tax simplification, broad tax reduction, and targeted relief for capital gains and estate taxes. The legislation is expected to generate a net tax reduction of $95 billion over 5 years for all taxpayers. A number of general and targeted tax relief provisions will reduce Federal taxes significantly for farmers and other rural residents, but also will increase the complexity of both Federal income and estate taxes. Farmers are expected to save more than $1.6 billion per year in Federal income taxes and $150-200 million in Federal estate taxes.