Keeping the family farm in the family

On January 1, 2026, the federal estate-tax exemption was scheduled to be cut roughly in half, from $13.99 million per person to about $7 million. The 2017 increase was running out.

Anyone who has run a relay knows the race is usually lost in the exchange zone, not the straightaways. The handoff is the dangerous moment. Rush it, fumble it, or change the rules in the middle of it, and years of good running come to nothing. For a farm family, the handoff from one generation to the next is that zone, and the estate tax is the thing most likely to knock the baton loose.

What the law did

The 2025 tax law, signed July 4, 2025, raised the exemption to $15 million per person for 2026, or $30 million for a married couple. It adjusts for inflation every year. Unlike the 2017 version, it has no expiration date. Above the line, the tax still takes 40%. That makes this a large, permanent increase, not a repeal. When the White House says the law eliminated the death tax, it overstates the case; the tax still applies to the largest estates.

It still matters for farms, because land is the farm. The Farm Bureau reports the average acre of farmland, with its buildings, was worth $4,140 in 2024, more than 37% above 2017. More than 80% of an average farm's assets are real estate, and real estate cannot be split off to cover a tax bill without shrinking the farm. A fixed exemption on rising land values gets smaller every year in real terms; an indexed one keeps pace.

USDA economists ran the numbers before the law passed. Under the lower exemption, the number of farm estates owing federal tax in 2026 would have jumped from about 120 to 424, and for large farms the share would have climbed from 2.8% to 7.3%. Total estate taxes on farms would have more than doubled, to about $1.2 billion.

Who actually pays it

Very few farms ever owed this tax, and skeptics are quick to say so. Even under the lower exemption, USDA estimated about 1% of farm estates would have paid it. That is why the honest word is relief, not rescue.

But the farms at risk are the large, full-time operations, and the threat shapes how families plan long before anyone dies. No agency counts the forced sales a stable exemption prevents; the difference shows up in the planning. As Kevin Kester, a fifth-generation California rancher, put it: "Now with the permanency of having a baseline indexed-up, we can plan." A line that moves every few years is a line nobody can plan around.

If your family owns a farm, ranch or business that might come anywhere near these numbers, sit down with an estate attorney this winter. The rules are finally stable. Use the time to practice the handoff.