Washington, D.C. – Extending the Trump tax cuts will be a critical lifeline to American farmers, whose livelihoods rely on provisions for family-owned and small businesses like the small business deduction, relief from the death tax, and the doubled standard deduction and would suffer greatly should those tax cuts expire and their tax burden increase dramatically. Under The One, Big, Beautiful Bill, family farmers and ranchers will benefit from a permanent small business deduction increased to 23 percent as well as a permanently expanded death tax exemption, 100 percent immediate expensing, increased small business expensing, immediate expensing for new production facilities which will allow farmers to invest in the growth of their operations, and greater flexibility at securing farming loans at lower cost.
During Ways and Means field hearings and the Committee’s Tax Team events across the country, witnesses and stakeholders made clear that an America First economic policy means extending these tax cuts as soon as possible. In the United States, 96 percent of the nation’s 2 million farms are family-owned, and 88 percent are small family farms.
Ways and Means Committee Chairman Jason Smith (MO-08) said:
“Just like other small businesses, farmers need certainty that their tax burden will not be escalating at the end of the year. They have to plan for the future and prepare for how they will operate, what equipment to invest in, and whether they can afford to pass along their business to the next generation. I grew up in a small farming community in Missouri and I raise cattle on my family farm. Farming is already one of the most difficult callings, yet farmers get up early every day to feed America. The One, Big, Beautiful Bill cuts taxes, stops a looming and potentially devastating tax increase, and helps more farmers pass on the farm intact to the next generation.”
READ: At Iowa State Fair, Americans Share the Benefits of Pro-Growth, Pro-Family, Pro-Farmer, Pro-Small Business Trump Tax Cuts
Here are key provisions helping American farmers:
Making Farm Equipment Affordable: Immediate expensing helps farmers afford the equipment needed to operate and turn a profit. As such expensing phases out, farmers have a harder time purchasing equipment. The One, Big, Beautiful Bill renews immediate expensing and expands small business expensing to help farmers and other small businesses replace broken equipment, like a broken combine in the case of one Iowa farmer.
Jolene Riessen, Iowa corn farmer: “My first thought is, if you like to eat, you will help us with this. From my experience…our combine last fall was having issues. We looked at it this spring. To fix it was going to be basically $80,000. A combine is worth $120,000. Guess what? We had to get a different combine. If I wanted a brand new one…that’s $750,000 for a 2025 [model]…I ended up buying a $450,000 one. When you buy that piece of equipment, you’re expected to pay it off in three to seven years. That’s usually what the finance is at. Those are pretty hefty bills that come to play. Being able to use that 100 percent depreciation, it freed up money so I can make those payments.”
Keeping Family Farms in the Family: Family farmers will benefit from the expanded death tax exemption made permanent in The One, Big, Beautiful Bill that is also indexed for inflation. More families will be able to pass on family-owned farms or small businesses to the next generation. When asked, a second-generation Iowa manufacturer explained that the expiration of the Trump tax cuts would hurt the ability to pass the business on to the 3rd and 4th generations.
Rep. Randy Feenstra (IA-04): “We got rid of it [the death tax] in the state of Iowa. I was a big proponent of that, but we haven’t got rid of it at the federal government. I have 170 some members that have signed on to my bill to get rid of the death tax. It’s a pilfer tax. Think about it this way: you collect all this land throughout your life, you die, and all of a sudden, your family members got to pay 42 percent tax on that land. Think about that. 42 percent. That is wrong in so many ways. Mr. Sukup, you’re talking about the third and fourth generation coming down the pipe. How will this affect you if you have to pay that 42 percent?”
Steve Sukup, Iowa manufacturer: “Our third generation is in the office every day. We have six members of our third generation. They enjoy coming to Sheffield, [Iowa] every day and working throughout the different jobs of our manufacturing. To be able to pass it on, that would just be overwhelming and not possible.”
Small Business Deduction Helps Family Businesses: The One, Big, Beautiful Bill increased the small business deduction to 23 percent and made it permanent. The enhanced deduction will help Main Street job creators as well as America’s family farmers expand, hire more employees, and invest more in their communities.
Rep. Claudia Tenney (NY-24): “Most of the businesses, as Ms. Pol said, in our communities are driven by small business owners, including our farmers. And so, we are just grateful to all of you for putting it in your words exactly what the catastrophic results could be if we don’t continue with these issues… But you talked about 199A, if it should expire, could you tell me just briefly what the operational changes you would have to make in the business if that were to happen?”
Lana Pol, small business owner: “Well, currently, I think what we would do is stop investing, you know. We wouldn’t be able to expense the equipment, you know. We wouldn’t have the extra money to reinvest into our employees and anything else that we wanted to pursue.”