What is and is not in the farm bill extension?
Before we conclude—there are a couple items that should be mentioned as farmers intensify their tax preparation efforts, since the March 1 filing deadline is not that far away. Bonus depreciation was set at 50% for property put into service in 2013—which duplicates the 2012 tax schedule. Also for Section 179 expensing, the deduction for both 2012 and 2013 was set at $500,000, with phase-out beginning when investments reach $2 million.
Finally the estate tax got a work over—which had been set to revert to a 55% tax on estates over $1 million. As for estate taxes, under the agreement--the rates will rise from 35 percent to 40 percent for estates valued at over $5 million dollars; however the Republicans did succeed in building in a provision which allows the amount of the $5 million exemption to be indexed to the rate of inflation.
The higher exemption is an important issue to farmland estates, which only takes 333 acres at $15 thousand per acre to max out on the exemption.
Dairy and farm legislation was approved by Congress as part of the "fiscal cliff" deal, but it was not the reform legislation that many sides wanted. The legislation extends the 2008 Farm Bill, and is essentially based on that farm policy, instead of anything new being developed by the Senate and the House Ag Committee.
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