S.1927 - Helping Ensure Rural Inheritance Transfers Are Generationally Enduring Act; HERITAGE Act (119th Congress)
Summary
The HERITAGE Act (S.1927) proposes to amend the Internal Revenue Code of 1986 by increasing the limitation on the aggregate reduction in fair market value of farmland for estate tax purposes. Specifically, it aims to raise the limit from $750,000 to $15,000,000 for qualified real property used for specific qualified uses, while maintaining the $750,000 limit for other qualified uses. The bill was introduced in the Senate on June 3, 2025, and referred to the Committee on Finance.
This adjustment is intended to help ensure the generational transfer of rural farmland by reducing the estate tax burden on farming families. The Act would apply to the estates of decedents dying after the date of enactment.
Expected Effects
If enacted, the HERITAGE Act would significantly reduce the estate tax liability for some farming families, particularly those with substantial land holdings. This could incentivize the continuation of farming operations within families, preventing the forced sale of farmland to cover estate taxes.
However, it could also disproportionately benefit larger farming operations and potentially increase the complexity of estate tax calculations.
Potential Benefits
- Facilitates the transfer of farmland to future generations, preserving agricultural heritage.
- Reduces the financial burden on farming families, potentially preventing the need to sell land to pay estate taxes.
- May encourage continued investment in agricultural operations.
- Could help maintain rural economies by supporting local farms.
- Simplifies estate planning for some farm owners by clarifying tax liabilities.
Potential Disadvantages
- Primarily benefits larger farming operations with significant land value, potentially exacerbating wealth inequality.
- Could lead to increased complexity in estate tax calculations due to the tiered system.
- May reduce federal tax revenue, potentially impacting other government programs.
- Could create an incentive for land speculation if the tax benefits are not carefully targeted.
- May not address other challenges faced by small farmers, such as market access and input costs.
Most Disadvantaged Areas:
Constitutional Alignment
The HERITAGE Act aligns with the general welfare clause of the Constitution (Preamble), as it aims to support agricultural viability and family farms, which can be argued to contribute to the overall well-being of the nation. The power to levy taxes is granted to Congress under Article I, Section 8, Clause 1, and the bill represents an adjustment to existing tax laws within that constitutional framework.
However, concerns about equal protection under the law (14th Amendment) could arise if the benefits disproportionately favor larger farming operations, potentially leading to legal challenges based on fairness and equity.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).