|WASHINGTON (July 26, 2023) – The National Cattlemen’s Beef Association (NCBA) announced support for the Preserving Family Farms Act of 2023 that was introduced by U.S. Representatives Jimmy Panetta (CA) and Mike Kelly (PA). This bipartisan legislation would expand IRS Code Section 2032A to allow cattle producers to take advantage of the Special Use Valuation and protect family-owned businesses from the devastating impact of the federal estate tax, commonly referred to as the Death Tax.
“America’s cattle producers deserve certainty in the tax code, especially when it comes to succession planning. NCBA is committed to fighting for common sense tax solutions, including the expansion of IRS Code Section 2032A Special Use Valuation, to allow more producers to secure greater relief from the estate tax and preserve family-owned cattle operations for generations to come,” said NCBA President Todd Wilkinson. “We applaud Representatives Panetta and Kelly for their leadership and dedication to protecting future generations of agricultural producers through the introduction of the Preserving Family Farms Act of 2023.”
In the Tax Reform Act of 1976, Congress recognized the disproportionate burden of the Death Tax on agricultural producers and created Section 2032A as a way to help farmers keep their farms. However, the benefits of Special Use Valuations have been stymied over the years as the cap on deductions has failed to keep pace with the rising value of farmland.
While the current 2032A reduction is 55 percent higher than the value established two decades ago, USDA estimates that cropland values have increased by 223 percent. Agricultural land values – including on-farm buildings – have also risen dramatically, increasing by 241 percent during this same period. Due to the rapid inflation of farmland values, the 2032A deduction is no longer aligned with the needs of modern agriculture – nor does it accomplish Congress’ intended goal of providing meaningful protection to those producers who are most vulnerable to the estate tax.