If Congress does not extend current tax provisions, farmers and ranchers in the United States could face an additional $9 billion in federal taxes annually. The tax relief measures from the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire at the end of this year, potentially leading to increased taxes for nearly two-thirds of families, including those in rural areas.
American Farm Bureau Federation economists have analyzed the impact of reverting to the previous tax code. "The size of a federal tax bill can make or break farm profitability, particularly for small farms on the brink of breaking even," states their latest Market Intel report. It further explains that each dollar spent on taxes is one less available for farm improvements, hiring workers, supporting local businesses, or investing in food production.
Key provisions such as capital expense deductions, qualified business income deductions, and estate tax would be affected if Congress does not act. On average, farms would see an increase of $5,125 per year in taxes.
Farm Bureau President Zippy Duvall commented on the situation: "Farm families, like all families in America, are struggling with higher prices. Farmers’ paychecks have shrunk at the same time because what they’re paid for their product has bottomed out, threatening the economic sustainability of rural America. Congress now has the opportunity to provide some stability for the men and women who work every day to ensure pantries are stocked for families across our country."
Potential job cuts could also occur as farmers seek ways to reduce expenses. The agriculture sector might lose up to 49,000 jobs, which translates into $3 billion in wages.
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