American Taxpayer Relief Act of 2012 Becomes Law

Many farmers and ranchers finally have an increased level of certainty regarding their federal estate and gift tax planning. After several years of worrisome temporary changes and “sun setting” unified credit exclusion amounts, the January 3, 2013 passage of the American Taxpayer Relief Act of 2012 has made permanent the federal estate tax and federal gift tax exclusion at the inflation adjusted amount of $5,000,000 per person or $10,000,000 per married couple. If Congress had failed to act, federal estate tax and federal gift tax exclusion amounts would have reverted back to $1,000,000 per person and federal estate tax rates would have gone up from 35 to 55 percent, which means that individual’s estates over $1,000,000 would have been required to pay a 55 percent tax on asset transfers on amounts over $1,000,000. With the increase in land values this would have created a serious tax consequence for many farmers and ranchers throughout the state