Critical Financial Considerations in Farmland Succession and Transition

There are many ways to bring about reduced taxes upon one’s death, related Anastasia Meyer, University of Nebraska-Lincoln agricultural economist.
Estate Tax Tax Cuts and Jobs Act--Federal. The federal estate tax provisions under the 2017 legislation significantly increased the estate and gift tax exemption amount. It was temporary. However, the “One Big Beautiful Bill Act” enacted last July, has made the higher exemption amounts permanent and increased them for 2026.
The federal gift tax exemption is $19,000 per person in 2025.
Capital Gain Tax--Federal. Meyer noted you hear a lot about it. Stepped-up basis is a tax provision allowing the value of an inherited asset to be adjusted to its fair market value at the time of the original owner’s death. Tax rate is dependent on income and length of ownership. Grain, livestock, machinery, land and prepaid assets on hand all qualify for stepped-up basis. At someone’s death, it may be important to begin collecting price data on these items. It can be difficult to find this information months, or years after the fact.
Nebraska Inheritance Tax: It is paid to the county where the property is located if a physical asset. Cash is generally split if the residence is elsewhere. The exception is if the property is transferred to a surviving spouse or anyone under 22 years of age. The Cornhusker State is among five with an inheritance tax.
1031 Tax Exchange: Allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. The gain is tax deferred but not tax free.
Refundable Nebraska Income Tax Credit For
Property Taxes Paid to Community Colleges
Meyer encouraged taking advantage of it.
The Property Tax Growth Limitation Act and the School District Property Tax Relief Act was enacted in an August 2024 special session. It removed the school district property tax credit from income tax returns effective Jan. 1, 2024 and placed the credit directly on the property tax statement. Only community college property taxes paid in 2025 can be claimed on 2025 income tax returns.
NextGen Tax Credit
The economist indicated it applies to anyone renting to a new or beginning farmer.
Beginning Farmer Tax Credit Program: Offers a refundable tax credit to existing farmer/livestock producers agreeing to rent to beginning farmers/ranchers. Must be a three-year lease. Credit is equal to 10 percent of cash rent or 15 percent of share rent, to include livestock.
Tenant: Must be Nebraska resident, have farmed less than 10 of the last 15 years and participate in an approved financial management program. Net worth less than $750,000.
Owner: Must have ownership. If a close relative, must attend an approved succession workshop and the asset included in the resultant plan.
Personal Property Tax Exemption: Up to $100,000 of personal property used in production may be exempt from personal property tax. Must apply by Nov. 1 of the year before credit sought.
You are advised to contact your tax, legal and accounting advisors.