Estate tax, otherwise known as the “death tax” or “gift tax,” kicks in when assets transfer after someone dies. It can have major implications for family farms when land values are high and cash is tight.
Extension Farm Management Specialist Kelly Wilfert says many farmers worry about the impact.
“For most folks, estate and gift tax is really a scary idea,” Wilfert says. “You hear that terrifying 40 percent tax rate and go, oh my gosh, I’m going to lose the farm if I don’t do some planning.”
But she says that’s not quite how the system works. Wilfert explains: “You’re probably familiar with the idea of a standard deduction when you do your income taxes, right? The same sort of thing is true with estate taxes.”
In 2025, each individual has a $13.99 million estate and gift tax exemption, meaning you can pass $13.99 million of assets on when you pass away or with lifetime transfers.
Wilfert cites USDA research in that only about 1.1 percent of farm households would have to pay estate taxes under that exemption if they hadn’t done any estate planning. However, that 2018 exemption was set to drop in 2026 to $7 million per person. It would have more than doubled the number of affected farms.
“What we saw here in this reconciliation package… they have increased that exemption again to $15 million per person,” Wilfert says.
This update is especially significant as farmland values continue to rise, she adds.
“With the inflated values of farmland today, we see these high net worth operations who would potentially be facing some estate tax,” Wilfert says.
Ultimately, she says, the new exemption helps families avoid having to sell land or scramble for cash just to cover the tax bill.
