Senate Proposes Some Farm Tax Savings In Millionaire Tax Bill

• October 10, 2011
• Paul Neiffer

The American Jobs Act introduced in the Senate last week (commonly known as the Millionaire Surtax Bill) contains some provisions that will help out our farmers.  These are:

• Extend the 100% bonus depreciation until December 31, 2012.  It is currently in place for all of 2011 and at 50% for 2012.  This would make it 100% in 2012.
• Cut the employer portion of the Social Security tax from 6.2% to 3.1% on the first $5 million of wages paid.  The maximum savings would be $155,000.  This tax cut would also apply to self-employed farmers on their personal earnings.
• Create a new credit to completely offset the employer Social Security tax on the wages in excess of the wages paid in the previous year.  For example, if a farmer paid $500,000 of wages in 2011 and increased these wages to $750,000, the 6.2% employer Social Security tax on the $250,000 excess would have a credit of $15,500 to offset the tax.  This would apply on up to $50 million of excess wages (I think this would cover most of the farmers in the US).
• Cut Social Security taxes in half in 2012 for all workers from 6.2% to 3.1%.  Currently for 2011, it is at 4.2%.
• Provide incentive work credits to hire unemployed veterans.  These credits could be as high as $9,600.

In order to pay for these tax cuts, the Act imposes a surtax of 5.6% on taxpayers earning more than $1 million beginning in 2013 (it is always interesting how these tax increases seem to apply right after a presidential election).  This is the so-called Millionaire Surtax provision.

All in all, there does appear to be several tax goodies in the Act for our farmers and almost everybody else that works for a living in the US.  If it passes, we will keep you updated on any changes.

Tags: American Jobs Act, Ag Policy, Farm Industry Trends, Farm Taxes | Comments Off on Senate Proposes Some Farm Tax Savings In Millionaire Tax Bill