An increase in the federal death tax that could have hit Kentucky farmers, small business owners and their families especially hard was averted when a measure to forever prevent a drastic hike in the levy — also known as the estate tax — was included in legislation passed earlier this week to avoid the so-called "fiscal cliff." Senate Minority Leader Mitch McConnell (R-Ky.), during talks with Vice President Joe Biden, was able to permanently erase the death tax for family farms and businesses valued at less than $5 million.
"I am pleased that we permanently prevented a massive increase in the death tax, which will help Kentucky farmers plan for the next generation. This is good news for Kentucky farmers who want to keep the farm in the family and would otherwise have to sell part or all of their assets or the farm itself to settle their tax burden,” Sen. McConnell said.
Without this change, farms and businesses valued at $1 million or more would have been taxed at 55 percent starting in 2013. The new deal sets a permanent 40-percent rate on those valued at more than $5 million (indexed to inflation), ensuring those valued at less than that same amount are exempt from any death tax liability.
The move was lauded by Kentucky Farm Bureau officials.
“Providing Kentucky farm families relief from the federal estate tax has long been a national priority of Kentucky Farm Bureau," said Mark Haney, president of the Kentucky Farm Bureau Federation. "Even as the fiscal cliff approached, Sen. McConnell was determined to keep the interests of Kentucky’s farm families and their financial stability at the forefront of the debate.”
