Biden Plans to Protect Farms from Elimination of “Stepped-Up” Basis
Ahead of Wednesday night’s joint session of Congress address by President Joe Biden, the White House released details of the American Families Plan, including Biden’s intention to end some tax breaks to pay for the package, including stepped-up basis. But the president said farmers and ranchers would be protected.
“The reform will be designed with protections so that family-owned businesses and farms will not have to pay taxes when given to heirs who continue to run the business,” said Biden.
“A long-standing provision of U.S. tax law is that a capital gains tax is not imposed when assets are transferred at death to an heir,” according to American Farm Bureau economist Veronica Nigh. “Tax law allows the heir to increase their basis in the asset to fair market value without paying capital gains tax,” which is referred to as a step-up in basis.