As farmers around the state complete their 2017 taxes, it’s natural to look forward into 2018. Because of federal tax reform, taxes in 2018 may look a lot different to many members.
“I don’t think we can undersell the significant changes made in this tax reform package,” said Jack Irvin, OFBF senior director of national and state policy. “It behooves us all to take a little time to work with our accountants and to take a look at what all the individual impacts are going to be for all these reforms.”
Some key highlights include lower tax rates and a more favorable status for individuals. The standard deduction has been increased and most of the itemized deductions have been eliminated or changed. Also, the estate tax exemption has been doubled to $11 million per person, which will provide relief to the vast majority of farmers.
“We’re studying things right now to see what strategies farmers may employ to manage their tax burden as much as they can,” said Barry Ward, Ohio State University Extension and director, OSU Income Tax Schools.
A 20-percent pass-through deduction from business to individual returns will benefit farmers as well.
“That’s going to be be significant,” Ward said. “That’s for a non-high income earner. If you have qualified income over $315,000 for a married couple, you will be subject to phaseouts. Under that amount, you will be eligible for the full 20-percent pass-through.”
Irvin urged members to visit American Farm Bureau’s federal tax reform resource information for a comprehensive, side-by-side comparison of those changes.
“There’s potentially thousands of dollars worth of savings for our individual farmers because of that reform and there’s no doubt that wouldn’t have happened without years of advocacy from our members,” Irvin said. “There are so many aspects of our public policy that have an incredible impact on the bottom line of our farms, and we appreciate all the engagement out there that helps us tell that story.”