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Tax Reform Bill Eases Farm Machinery Depreciation

Tax reform looks to get a vote by the House and Senate this week.

For farmers, the bill has bonus depreciation for equipment. It would let them expense all money spent on machinery in one year instead of being spread out.

However, Pat Wolff with the American Farm Bureau says it won't last long, "That's, we think, just a temporary provision and that will last for five years so that's good news, but it also means starting next year we'll be working to make that permanent."

Wolff says the bill looks good for producers and will have an across-the-board cut in individual rates, and relief for "pass-through" small businesses, which most farms are.

Also, any company who is not a c-corporation, will be able to take a deduction equal to 20 percent of their profits.

Iowa Senator Chuck Grassley says this creates equity between small business and big corporations by having tax rates be more comfortable.

Grassley says, "That much of income from a farming operation will be considered return on capital investment will be above the line deduction so that whatever tax rates you're in, you'll be in a lower tax rate."

A final deal for the estate tax is not very clear, but the American Farm Bureau is confident the exemptions will be doubled to $11 million a person and $22 million for a couple.