Economic Research Report No. (ERR-252) 45 pp

June 2018

Estimated Effects of the Tax Cuts and Jobs Act on Farms and Farm Households

The Tax Cuts and Jobs Act of 2017 made significant changes to the Federal income tax system. According to an ERS analysis of the potential impact of the law on family farms, average tax rates are expected to decline across all farm sizes and commodity specializations, with effects on farm households varying by farm size. Estimates also suggest fewer farm estates will be subject to estate tax.

Errata: On March 25, 2019, the report Estimated Effects of the Tax Cuts and Jobs Act on Farms and Farm Households (ERR-252, June 2018) was reposted to correct the simulated effective tax rate under the 2017 Tax Cuts and Jobs Act (TCJA) for very large farms. The corrected rate—31.2 percent—was applied to the underlying data for the report summary chart, table 5, and the calculated difference between the simulated TCJA rate and the effective tax rate under the previous law. The associated text referencing the absolute rate was also revised.

Keywords: Tax Cuts and Jobs Act, taxation, farm taxes, farm investment demand, cost recovery, bonus depreciation, section 179, farm household well-being

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Last updated: Thursday, June 28, 2018

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