Bill Summary
The "Helping Ensure Rural Inheritance Transfers Are Generationally Enduring Act" (HERITAGE Act) is proposed legislation that aims to amend the Internal Revenue Code of 1986 to increase the limits on the reduction of the fair market value of farmland for estate tax purposes. Specifically, it raises the cap from $750,000 to $15 million for qualified real property used for certain agricultural purposes, while maintaining the $750,000 limit for other types of qualified use. This change is intended to facilitate the transfer of farmland within families, making it easier for heirs to inherit agricultural property without facing significant estate tax burdens. The amendments would apply to estates of individuals who pass away after the enactment of the legislation.
Possible Impacts
The "Helping Ensure Rural Inheritance Transfers Are Generationally Enduring Act" (HERITAGE Act) could affect people in several ways:
1. **Increased Estate Tax Exemptions for Farmers**: By raising the limit on the aggregate reduction in fair market value of farmland from $750,000 to $15 million for qualified real property used for agricultural purposes, the Act allows farmers and their heirs to retain more of their land without facing steep estate taxes. This could help keep family farms intact across generations, allowing families to continue their agricultural legacy without the financial burden of estate taxes.
2. **Encouragement of Agricultural Investment**: With a higher exemption threshold, farmers may feel more secure in investing in their properties, knowing that their heirs will not be penalized by excessive estate taxes when the property is inherited. This could lead to improvements in land management, enhancements in agricultural productivity, and the preservation of rural communities, ultimately benefiting the economy and the agricultural sector.
3. **Impact on Rural Communities**: The ability to pass down farmland without heavy taxation may contribute to the stability of rural communities. As family farms remain operational and continue to be passed down through generations, it can foster a sense of community, maintain local agricultural economies, and preserve cultural practices tied to farming. This could also mitigate urbanization pressures on rural areas, helping to maintain their character and sustainability.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1927 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 1927
To amend the Internal Revenue Code of 1986 to increase the limitation
with respect to the aggregate reduction in fair market value of
farmland for purposes of application of the estate tax.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 3, 2025
Mrs. Hyde-Smith introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to increase the limitation
with respect to the aggregate reduction in fair market value of
farmland for purposes of application of the estate tax.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Helping Ensure Rural Inheritance
Transfers Are Generationally Enduring Act'' or the ``HERITAGE Act''.
SEC. 2. INCREASE IN LIMITATION ON AGGREGATE REDUCTION IN FAIR MARKET
VALUE OF FARMLAND.
(a) In General.--Section 2032A(a)(2) of the Internal Revenue Code
of 1986 is amended by striking ``shall not exceed $750,000'' and
inserting: ``shall not exceed--
``(A) in the case of qualified real property which
was being used for a qualified use described in
subparagraph (A) of subsection (b)(2), $15,000,000, and
``(B) in the case of qualified real property which
was being used for a qualified use described in
subparagraph (B) of such subsection, $750,000.''.
(b) Conforming Amendment.--Section 2032A(a)(3) of the Internal
Revenue Code of 1986 is amended--
(1) in the matter preceding subparagraph (A), by striking
``the $750,000 amount'' and inserting ``each dollar amount'',
and
(2) in subparagraph (A), by striking ``$750,000'' and
inserting ``such dollar amount''.
(c) Effective Date.--The amendments made by this section shall
apply to the estates of decedents dying after the date of the enactment
of this Act.
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