Friday, January 4, 2013

What Do Agricultural Landowners Need to Know about the Fiscal Cliff Bill?

Many thanks to my good friends at the Florida Forestry Association for putting together the list below of important takeaways from the Fiscal Cliff Bill (officially the American Taxpayer Relief Act of 2012). Although they're primarily aimed at forest landowners, these points are useful to other landowners in Florida and elsewhere:
  • Estate Taxes: Estate tax levels were permanently set at a $5 million individual exemption ($10 million for couples) and a 40 percent tax rate.
  • Farm Bill: Current provisions that expired September 30th, 2012, were extended for one year. With some limitations, forest owners maintained access to needed tools through conservation programs.
  • Capital Gains Taxes: Capital gains tax rates remain at 15 percent for individuals with an annual income less than $400,000 ($450,000 for couples). For those with higher incomes, the rate increases to 20 percent.
  • Conservation Easement Tax Incentives: Tax incentives for conservation easements, which had ended in 2011, were retroactively extended through 2013.
  • Spending Cuts to Forest Programs: Across the board cuts on all federal spending, originally scheduled to be enacted January 1, were delayed for two months. 
  • Payroll Taxes: The payroll tax was temporarily reduced in 2010 from 6.2 percent to 4.2 percent. The reduction expired Dec. 31, 2012, when neither side in Congress moved to extend it. Employers will not be affected because their side of the equation was never reduced; employees' take-home pay will decrease, however. Households making $45,000, for example, can expect to pay $900 more in taxes this year.