WASHINGTON, D.C. – Ever since then U.S. House of Representative Kristi Noem attempted to use a family anecdote to shore up the position that the so-called ‘death tax,’ needed repealing – an anecdote later discovered to have been grossly misrepresented by her – there has not been much made of flouting the federal inheritance tax and its purported cost to ranchers, farmers and other small businesses.
The estate tax exemption for ranchers, farmers and small businesses is $12.06 million. Estate planning is such that prohibitive inheritance tax is entirely avoidable. In addition to the exemption amount, a spouse can now elect to receive the unused portion of a spouse’s exemption (called portability). If one spouse passes away with $7 million in assets, the surviving spouse’s exemption can expand to include the unused $5.06 million. All this adds up to most people not having to worry about estate taxes.
That hasn’t stopped U.S. Sen. John Thune (R-S.D.), ranking member of the Subcommittee on Taxation and Internal Revenue Service Oversight, from reintroducing legislation to permanently repeal the federal estate tax, called the death tax by some.
“Agriculture is the backbone of South Dakota’s economy,” said Thune. “For years I have fought to protect farm and ranch families from the onerous and unfair death tax. Family-owned farms and ranches often bear the brunt of this tax, which makes it difficult and costly to pass these businesses down to future generations. I will continue to do everything in my power to remove these roadblocks for family businesses and repeal the death tax once and for all.”
Despite Thune’s claims, an April 2021 report by the USDA Economic Research Service reports only 0.20 percent of the 35,683 farm estates required to file an estate tax return for 2021 would have an estate-tax liability. None of those are known to be located in South Dakota.
Thune led the Senate’s attempt to repeal the estate tax while Congress considered the Tax Cuts of Jobs Act (TCJA) in 2017. Although the final version of the TCJA did not repeal the death tax, the law effectively doubled the individual estate and gift tax exclusion to $10 million ($12.9 million in 2023 dollars) through 2025, which prevents more families and generationally-owned businesses from being affected by this tax.
Thune’s bill is supported by more than 150 members of the Family Business Coalition and 111 members of the Family Business Estate Tax Coalition, which includes the American Farm Bureau Federation, the National Cattlemen’s Beef Association, the National Federation of Independent Business, the Associated General Contractors of America, the Policy and Taxation Group, the National Association of Home Builders, the National Association of Manufacturers, and many others.