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The ‘HERITAGE Act’ Updates IRS Valuation Limits to Allow More Families to Keep Their Farms After a Family Death
WASHINGTON, D.C. – U.S. Senator Cindy Hyde-Smith (R-Miss.) introduced the HERITAGE Act, legislation to ensure family farms and ranches can survive by helping heirs avoid having to sell productive farmland to pay federal estate or “death” taxes.
Hyde-Smith’s Helping Ensure Rural Inheritance Transfers Are Generationally Enduring Act (HERITAGE Act) would help preserve family-owned agricultural land by adjusting the Internal Revenue Code (IRC) that today forces many families to sell their farmland to pay federal estate tax liabilities.
“Tax concessions set almost 50 years ago to help sustain family farms don’t work in today’s world. It’s heartbreaking to see a grieving family forced to sell off assets, portions of their farmland, or lose their farm entirely to cover federal estate taxes. The loss of working farm and range lands is just as damaging for production and the economic vitality of rural communities,” Hyde-Smith said. “It’s time to modernize the Internal Revenue Code to give heirs a fighting chance to carry on the proud American tradition of passing down family farms through generations.”
The HERITAGE Act would amend IRC Section 2032A, which was enacted in 1976 to allow special-use valuation of farmland to reduce the estate tax value of farming operations. The maximum reduction under the 1976 law is just $750,000, slightly adjusted for inflation, and woefully inadequate for preserving modern family farm operations—many of which are considered “land rich but cash poor.”
Hyde-Smith’s legislation would, among other things, increase the special use valuation cap to $15 million for qualified real property used for farming purposes. This change would help keep many heirs from being forced to face a choice between selling portions of their productive farmland or incurring substantial debt to pay estate tax liabilities.
The HERITAGE Act would:
- Increase Special-Use Valuation Limit: Raises the maximum reduction in farmland value to $15,000,000 for qualified real property used for farming purposes.
- Preserve Family Farms: Enables seamless generational transfers without forcing land sales, and prevents the breakup of family farming operations due to federal estate tax burdens.
- Support Rural Communities: Helps maintain local agricultural economies and preserves farming heritage in rural America.
Mississippi has lost more than 11 percent of its farms since 2017, with total farmland shrinking by an average of 200,000 acres in that time span, according to the 2022 USDA Census of Agriculture. This decline has accelerated due to rising costs, generational transition, and federal tax burdens.
There are nearly 35,000 farms in Mississippi, a significant portion of which are family-owned operations that contribute to the state’s annual $7.5 billion agricultural economy. The HERITAGE Act would directly benefit these family-owned farms and ranches across the nation by allowing them to maintain their agricultural heritage without the financial burden of estate taxes.
In February, Hyde-Smith sought testimony from stakeholders at a Senate Agriculture Committee hearing on the negative effect the federal estate tax has on family farms. That month the Senator also renewed her support for separate legislation to permanently repeal the federal estate tax.
The HERITAGE Act is supported by the Mississippi Farm Bureau Federation, National Cattlemen’s Beef Association (NCBA), Mississippi Forestry Association, National Cotton Council, Catfish Farmers of America, USA Rice Federation, United Egg Producers, Delta Council, Mississippi Economic Council, and Livestock Marketing Association.
“This legislation is long overdue. As a farmer who was deeply impacted by inheritance tax in the 1980s, which took my family a decade to overcome, I understand the importance of this legislation on the future of farms throughout Mississippi,” said Mississippi Farm Bureau Federation President Mike McCormick. “Thank you, Senator Hyde-Smith for your steadfast support for the future of the family farm.”
“As a Mississippi cattleman, a former IRS agent, and now the Chair of NCBA’s Tax and Credit Committee, I have seen firsthand how the Death Tax kills the legacy of family farms and ranches,” said Jeff Magee, chair of the NCBA Tax and Credit Committee. “To make sure the next generation of family farmers and ranchers can not only stay in business, but thrive, we need Congress to eliminate the threat of the Death Tax. NCBA is very pleased to support Senator Hyde-Smith’s HERITAGE Act that would increase the limit on special use valuation, a tool that accurately values agricultural land so farmers and ranchers are not taxed based on what their land would be worth to developers or hedge funds. By increasing special use valuation, this bill reduces the burden caused by the Death Tax, preserves family farms, and protects rural communities.”
“Generational family farms provide employment and stability for many Mississippi families and communities. They also feed, clothe, and provide products for millions of Americans each year and are the backbone of rural economies across our state. To ensure family farms and rural communities exist in future generations, it is imperative to pass legislation that protects heirs from crippling tax burdens that would force them to sell their family farmland and timberland,” said Casey Anderson, Mississippi Forestry Association Executive Director.
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