A top priority for National Cattlemen’s Beef Association in the new Congress is passing  legislation that will lower taxes for family farms and ranches.

NCBA is tracking four bills, said Kelsea Kemp NCBA associate director of government affairs.

One is the Main Street Tax Certainty Act, introduced by Rep. Lloyd Smucker, R-Penn.

Section 199A of the tax code allows pass-through businesses to deduct 20% of their qualified business income from their regular taxable income .

“This is a really important tool that helps some cattle producers compete on a level playing field with larger corporations and save money on their taxes, be able to reinvest into their businesses,” she said.

Set to expire

The provision was established in the 2017 Tax Cuts and Jobs Act and will expire at the end of the year without any action.

“It’s one of NCBA’s top priorities this year,” she said.

More than half of cattle producers use the provision, according to a recent NCBA tax survey.

“USDA also reports that elimination of 199A would increase tax liabilities for farmers and ranchers by $2.2 billion … that’s no small number,” she said.

Another bill on NCBA’s watch list is the Small Business Growth Act, introduced by Sen. John Barrasso, R- Wyo. It increases the Section 179 limit in the tax code from $1 million to $2 million, she said.

Income tax

The bill would allow business owners to deduct the cost of business purchases — such as new equipment or expanding facilities — from their income that tax year instead of depreciating it over multiple years, she said.

That increase will extend to many purchases that cattle producers may need to make for their business, she said.

More than half of cattle producers in the survey reported using Section 179 in the last three years, and 45% said they would have incurred an additional tax burden over $20,000 without it.

Bonus depreciation
The ALIGN Act, introduced by Rep. Jodie Arrington, R-Texas, is also on NCBA’s radar. It deals with bonus depreciation and is similar to Section 179. Bonus depreciation in the proposal has no dollar limit on qualified purchases, whereas Section 179 currently has the $1 million limit.

Section 179 allows businesses to deduct 100% of a purchase using bonus depreciation in the year the expense was made, but it phases out. The allowed deduction in 2025 is only 40% of the purchase in the first year. The ALIGN Act would make 100% depreciation permanent, she said.

“This is a very important tool for cattle producers when expensing very large purchases,” she said

In the tax survey, 44% of respondents said they used bonus depreciation in the last three years, and 31% said they would have incurred an additional tax burden over $20,000 without it.

Estate tax

The final bill on the current watch list is the Estate Tax Rate Reduction Act, introduced by Rep. Arrington. It would reduce the estate tax rate from 40% to 20%.

The estate tax only applies to estates above the exemption limit, which is currently $13.99 million per individual.

NCBA’s goal is full repeal of the estate tax, but the proposed rate reduction will be helpful to cattle producers who are subject to the estate tax, she said.