Could 100% Bonus Depreciation Return Under Trump’s Second Term?
Source: DairyNews.today
President-elect Donald Trump’s return to the White House brings speculation about potential policy shifts that could impact the agricultural sector, including possible changes to tax policy. While Trump’s second term isn’t consecutive, observers say lessons learned from his first administration might shape a more focused policy agenda.
“He’s learned a lot since his first term,” noted Jim Wiesemeyer, Washington correspondent for Farm Journal. “This time, he’s better prepared. We won’t see as many Cabinet members who eventually write critical books about him.”
The question of who will lead Trump’s Cabinet is fueling speculation, especially the anticipated pick for Secretary of Agriculture. But perhaps the most anticipated change relates to tax policy. “There’s a strong likelihood that many, if not all, of the expiring tax cuts from Trump’s 2017 legislation will be renewed, particularly the estate tax exemptions,” Wiesemeyer said. “That would be a significant win for the agricultural sector.”
For farmers, tax continuity and potential new tax breaks could shape future planning, says agricultural tax expert Paul Neiffer. “A definite win will be no tax increases,” said Neiffer, a CPA and contributor to AgWeb. While Trump’s campaign proposed no tax on tips and social security, Neiffer doesn’t see these passing due to their likely impact on the federal deficit. However, he expects permanence for the estate tax exemption, which will rise to nearly $14 million next year, benefiting farmers facing potential estate taxes.
Neiffer anticipates increases in other deductions, like the Section 2032A deduction, which provides an alternative valuation for certain farm property. “This deduction could be increased to $14 million per taxpayer, which would be a huge benefit to farmers,” he noted. He also sees potential for extending the Section 199A deduction and lowering the corporate tax rate, which could encourage more farmers to incorporate their businesses. “We could see the corporate tax rate drop to 15% for farmers, which could lead to a shift from individual to corporate farming operations.”
Among the most anticipated potential changes, Neiffer sees the return of 100% bonus depreciation. “We might see 100% bonus depreciation back on the table,” he said. “This would allow farmers to immediately deduct 100% of the cost of new equipment and farm buildings in the year of purchase, a major advantage.” Neiffer cautioned, however, that farmers would need to carefully manage depreciation strategies in line with their debt.
Wiesemeyer emphasized that farmers would likely see minimal changes to capital gains taxes under a Trump administration, contrasting with Democratic nominee Kamala Harris’s proposals to raise capital gains taxes.
If these anticipated policies materialize, Trump’s second term could offer significant financial benefits for the agricultural community, positioning farmers to optimize their operations amid ongoing economic shifts.
The question of who will lead Trump’s Cabinet is fueling speculation, especially the anticipated pick for Secretary of Agriculture. But perhaps the most anticipated change relates to tax policy. “There’s a strong likelihood that many, if not all, of the expiring tax cuts from Trump’s 2017 legislation will be renewed, particularly the estate tax exemptions,” Wiesemeyer said. “That would be a significant win for the agricultural sector.”
For farmers, tax continuity and potential new tax breaks could shape future planning, says agricultural tax expert Paul Neiffer. “A definite win will be no tax increases,” said Neiffer, a CPA and contributor to AgWeb. While Trump’s campaign proposed no tax on tips and social security, Neiffer doesn’t see these passing due to their likely impact on the federal deficit. However, he expects permanence for the estate tax exemption, which will rise to nearly $14 million next year, benefiting farmers facing potential estate taxes.
Neiffer anticipates increases in other deductions, like the Section 2032A deduction, which provides an alternative valuation for certain farm property. “This deduction could be increased to $14 million per taxpayer, which would be a huge benefit to farmers,” he noted. He also sees potential for extending the Section 199A deduction and lowering the corporate tax rate, which could encourage more farmers to incorporate their businesses. “We could see the corporate tax rate drop to 15% for farmers, which could lead to a shift from individual to corporate farming operations.”
Among the most anticipated potential changes, Neiffer sees the return of 100% bonus depreciation. “We might see 100% bonus depreciation back on the table,” he said. “This would allow farmers to immediately deduct 100% of the cost of new equipment and farm buildings in the year of purchase, a major advantage.” Neiffer cautioned, however, that farmers would need to carefully manage depreciation strategies in line with their debt.
Wiesemeyer emphasized that farmers would likely see minimal changes to capital gains taxes under a Trump administration, contrasting with Democratic nominee Kamala Harris’s proposals to raise capital gains taxes.
If these anticipated policies materialize, Trump’s second term could offer significant financial benefits for the agricultural community, positioning farmers to optimize their operations amid ongoing economic shifts.
