What fiscal cliff means for forest landowners
Posted: January 2, 2013
The American Forest Foundation (AFF) has a good summary of the income and estate tax and Farm Bill related cost share program implications.
Let me just say this temporary. Although we not out of the woods yet (no pun intended) the latest fiscal bill does impact wealthier landowners. The Farm Bill was extended as is, but its likely that some of the cost share programs will be sequesterEd sooner or later when the spending cuts hit.
Here is a piece from AFF on Farm Bill programs at stake and below is their overall summary:
Estate Tax
The estate tax levels are permanently set at a $5 million exemption ($10 million for couples) and a 40 percent tax rate—a slight increase from the 35 percent estate tax we advocated to maintain. The exemption level is adjusted for inflation each year, and because the levels are permanent, we won’t be back at the negotiating table in another year or two. While this isn’t everything we asked for, we think this is a very good outcome, in light of the circumstances!
The estate tax levels are permanently set at a $5 million exemption ($10 million for couples) and a 40 percent tax rate—a slight increase from the 35 percent estate tax we advocated to maintain. The exemption level is adjusted for inflation each year, and because the levels are permanent, we won’t be back at the negotiating table in another year or two. While this isn’t everything we asked for, we think this is a very good outcome, in light of the circumstances!
Farm Bill
The fiscal cliff deal extended current Farm Bill provisions that expired on September 30th for one year. Although the farm bill extension is somewhat disappointing—none of the policy changes and improvements we fought for were included—for the most part, forest owners will continue to have access to tools through the conservation programs (with some program limitations). We’re confident we can maintain the improvements included in the 2012 House and Senate Farm Bill proposals in any comprehensive Farm Bill legislation proposed in 2013. As of right now, the House is tentatively scheduled to mark-up Farm Bill legislation on February 27th. Learn more...
The fiscal cliff deal extended current Farm Bill provisions that expired on September 30th for one year. Although the farm bill extension is somewhat disappointing—none of the policy changes and improvements we fought for were included—for the most part, forest owners will continue to have access to tools through the conservation programs (with some program limitations). We’re confident we can maintain the improvements included in the 2012 House and Senate Farm Bill proposals in any comprehensive Farm Bill legislation proposed in 2013. As of right now, the House is tentatively scheduled to mark-up Farm Bill legislation on February 27th. Learn more...
Capital Gains Tax
Capital gains taxes are an issue for many family forest owners when they sell their timber. As a result of the fiscal cliff deal, capital gains tax rates will remain at 15 percent for individuals with an annual income less than $400,000 ($450,000 for couples) but will increase to 20 percent for individuals and families above the threshold.
Capital gains taxes are an issue for many family forest owners when they sell their timber. As a result of the fiscal cliff deal, capital gains tax rates will remain at 15 percent for individuals with an annual income less than $400,000 ($450,000 for couples) but will increase to 20 percent for individuals and families above the threshold.
Conservation Easement Tax Incentives
A conservation easement is a tool that some forest owners choose to use to protect their land from development, and the fiscal cliff deal retroactively extended the enhanced conservation easement tax incentives through 2012 and 2013. (The tax incentives had expired in 2011).
A conservation easement is a tool that some forest owners choose to use to protect their land from development, and the fiscal cliff deal retroactively extended the enhanced conservation easement tax incentives through 2012 and 2013. (The tax incentives had expired in 2011).
Across the Board Spending Cuts to Forest Programs
In addition to tax policy and the Farm Bill, the deal also included a 2 month delay on the across the board spending cuts (aka “sequestration”) that were set to take place on January 1st—to all federal spending. While it’s not a permanent solution, this keeps programs like the Forest Stewardship Program and forest health programs from facing as much as an 8% cut in funding on top of cuts that it has already taken in this fiscal year. While we know forest programs should not be immune to spending cuts, we will continue to work to ensure we don’t see disproportionate cuts to programs that will help woodland owners and the economy.
In addition to tax policy and the Farm Bill, the deal also included a 2 month delay on the across the board spending cuts (aka “sequestration”) that were set to take place on January 1st—to all federal spending. While it’s not a permanent solution, this keeps programs like the Forest Stewardship Program and forest health programs from facing as much as an 8% cut in funding on top of cuts that it has already taken in this fiscal year. While we know forest programs should not be immune to spending cuts, we will continue to work to ensure we don’t see disproportionate cuts to programs that will help woodland owners and the economy.
