Farmers advised to plan for possible estate tax changes

Farmers in Davidson County are being urged to review their estate plans before a potential shift in federal tax rules takes effect.

Paul Neiffer, a CPA who serves agricultural clients, spoke to RFD-TV about the step-up in basis. This provision currently allows heirs to reset the tax value of inherited property to its market price at the owner's death. Neiffer said this rule is central to how many farm families pass down land and equipment without facing immediate tax bills.

He noted that previous proposals during the Biden administration included taxing unrealized capital gains when assets are transferred. Under those ideas, heirs would owe tax on appreciation that happened while the previous owner lived. Neiffer cited potential rates between 20 percent and 45 percent. Some drafts also included a $5 million exemption and extra relief for farmers, but he said the details remain uncertain.

"Step-up in basis is very important to our farmers, but if this does happen, they're going to end up paying the tax in order to get the step-up," Neiffer said. He explained that even with an exemption, estates above that threshold could face large liabilities on appreciated assets like long-held land.

Neiffer encouraged farmers to use the next two years to work with their accountants and attorneys. He warned that waiting until after the November 2028 election could leave families scrambling if legislation moves quickly. "If you don't have that framework in place and you try to pull the trigger with two months at the end of 2028, the attorneys are going to be swamped. The CPAs are going to be swamped," he said.

He estimated there is more than a 75 percent chance of such a change if Democrats gain full control of the federal government after the 2028 elections. That figure reflects his assessment, not enacted policy. Neiffer is currently sharing additional analysis on the topic on his blog, FarmCPAReport.com.