Title page
Contents
Abstract 3
Acknowledgments 3
Summary 5
Introduction 7
Current Family Farm Household Income and Tax Characteristics 9
The Federal Income Tax 11
Expiring Individual Income Tax Provisions 12
Income Tax Rates, Tax Brackets, Standard Deductions, and Personal Exemptions 12
Child Tax Credit 15
Alternative Minimum Tax 20
Earned Income Tax Credit 24
Expiring Business Tax Provisions 27
Qualified Business Income Deduction 27
Capital Expensing 29
Excess Business Loss Limits 32
Summary of Expiring Individual Income Tax Provisions 34
The Federal Estate Tax 35
Estimating the Impact of the Expiring Federal Estate Tax Provision 36
Estimated Results 38
Summary of the Impact of Sunsetting Estate Tax Provisions 39
Conclusion 40
References 43
Appendix A: Statistical Tests 44
Expiration of Tax Cuts and Jobs Act (TCJA) Tax Rates and Standard Deduction, and Restored Personal Exemptions 44
Expiration of Tax Cuts and Jobs Act (TCJA) and American Rescue Plan Act (ARPA) Child Tax Credit Expansions 45
Expiration of American Rescue Plan Act (ARPA) Earned Income Tax Credit (EITC) Expansions 46
Expiration of Alternative Minimum Tax (AMT) Provisions 47
Expiration of the Qualified Business Income Deduction (QBID) 48
Expiration of Bonus Depreciation 49
Appendix B: Portability of Farm Household Estate Tax Exemption Estimation 51
Method 51
Data 53
Results 53
Appendix C: Results of Sunsetting the Farm Estate Tax Exemption While Assuming Low and High Asset Value Growth 55
Results of Sunsetting the Farm Estate Tax Exemption While Assuming Low Asset Value Growth 55
Results of Sunsetting the Farm Estate Tax Exemption While Assuming High Asset Value Growth 56
Appendix D: Statistical Tests for Differences in the Impact of Changes to the Farm Estate Tax Exemption 58
Table 1. A comparison of the distribution of acres operated by underserved producers from USDA's Census of Agriculture (2017) and Agricultural Resource... 9
Table 2. Income and capital gains by farm typology and underserved farm households 10
Table 3. The percentage of farm households with a State and local tax (SALT) deduction that is greater than the limit and the impact on tax liabilities for... 15
Table 4. Child tax credit parameters 16
Table 5. Impact of expiring American Rescue Plan Act (ARPA) and Tax Cuts and Jobs Act (TCJA) child tax credit expansions on farm households 17
Table 6. Effects of expiring alternative minimum tax (AMT) provisions on tax liabilities and percent subject to the tax 21
Table 7. 2021 earned income tax credit (EITC) maximum credit amounts and phaseout ranges 25
Table 8. Impact of the expiring expanded earned income tax credit (EITC) for farm households without children. Low-sales and retirement farms have... 26
Table 9. Percent of farm households that receive a qualified business income deduction (QBID) and the impact on average tax liability 28
Table 10. The effect of the expiring bonus depreciation on farm households 31
Table 11. Percentage of farm households with a loss greater than the excess loss limit and the average amount of excess loss 33
Table 12. Forecast results of sunsetting estate tax exemption for farm estates 38
Table 13. Total change in tax liability for farm households for each sunsetting tax provision 41
Figure 1. Distribution of farms by legal tax status 11
Figure 2. Increase in tax liabilities resulting from expiring Tax Cuts and Jobs Act (TCJA) provisions that would increase tax rates, decrease deductions,... 13
Figure 3. Increase in tax liability for underserved farm households resulting from expiring Tax Cuts and Jobs Act (TCJA) provisions that would increase tax rates,... 14
Figure 4. Change in child tax credit (CTC) for eligible farm households resulting from expiring CTC provisions in the American Rescue Plan Act (ARPA) and... 18
Figure 5. Change in percent of farm households with refundable child tax credit (CTC) resulting from expired American Rescue Plan Act (ARPA) and... 19
Figure 6. Impact of expiring alternative minimum tax (AMT) provisions on underserved farm households 22
Figure 7. Impact of sunsetting alternative minimum tax (AMT) provisions, combined with increased exempted income from expiring State and local tax (SALT)... 23
Figure 8. Percent of farm households subject to the alternative minimum tax (AMT) if AMT provisions and marginal tax rates sunset 24
Figure 9. Impact of sunsetting the American Rescue Plan Act (ARPA) earned income tax credit (EITC) expansion on childless workers 27
Figure 10. The impact of eliminating the qualified business income deduction (QBID) on tax liabilities for underserved farm households 29
Figure 11. Historical Section 179 capital expensing and first-year bonus depreciation limits, 1987-2021 30
Figure 12. Impact of expiring bonus depreciation on underserved farm households 32
Figure 13. Change in total tax liability for each sunsetting provision 34
Figure 14. Unified credit exemption amount and average commercial farm net worth, 2000-26 35
Figure 15. Annualized growth rate in farm real estate, 2010-20 (inflation-adjusted values) 37
Figure 16. Percent of farm estates taxed for underserved farm households 39
Figure 17. The total farm estate tax liability resulting from expiring increased estate tax exemption 40
Table A.1. Pairwise t-test of differences between each farm household type's change in average tax liability 44
Table A.2. T-test of difference between the change in tax liability for each underserved group versus the relevant reference group 45
Table A.3. Pairwise t-test of differences between each farm household type's change in average child tax credit 45
Table A.4. T-test of the difference between the change in tax liability for each underserved group versus therelevant reference group 46
Table A.5. Pairwise t-test of differences between each farm household type's change in average earned income tax credit (EITC) 46
Table A.6. T-test of the difference between the change in tax liability for each underserved group versus the relevant reference group 47
Table A.7. Pairwise t-test of the differences between each farm household type's change in average tax liability 47
Table A.8. T-test of the difference between the change in the tax liability for each underserved group versus the relevant reference group 48
Table A.9. Pairwise t-test of the differences between each farm household type's change in average tax liability 48
Table A.10. T-test of difference between the change in tax liability for each underserved group versus the relevant reference group 49
Table A.11. Pairwise t-test of the differences between each farm household type's change in average tax liability 49
Table A.12. T-test of the difference between the change in tax liability for each underserved group versus the relevant reference group 50
Table B.1. Comparison of tax simulation results with different methods for calculating portability 54
Table C.1. Forecast results of sunsetting the farm estate tax exemption assuming low asset growth 55
Table C.2. Percent of underserved and beginning farm estates taxed assuming low asset growth 56
Table C.3. Forecast results of sunsetting the farm estate tax exemption, assuming high asset growth 56
Table C.4. Percent of underserved and beginning farm estates taxed, assuming high asset growth 57
Table D.1. Pairwise t-test of the change in the conditional probability of a positive estate tax liability by typology 59
Table D.2. T-test of the difference between the change in the conditional probability of a positive estate tax liability for each underserved group versus... 59