Tax break bill for inherited farmland advances
DENVER — The Colorado House gave preliminary approval to a bill Monday that would offer a state tax break on inherited agricultural land.
The measure, House Bill 1042, is designed to cut in half the federal inheritance tax, which currently has been suspended but is due to return next year.
Under current law, half of the inheritance tax assessed by the federal government goes to those states that tie their estate tax to the federal law. Doing away with a state inheritance tax only leads to all the money going to the federal government, said Rep. Sal Pace, D-Pueblo, sponsor of the bill.
Keeping a state tax, but offering a tax break, instead, cuts that tax liability by as much as 15 percent, he said.
“We should do whatever we can to support agriculture in this state,” Pace said.
The bill, which needs a final House vote before it can head to the Senate, requires the family that inherited the land to keep it for agricultural use for at least 10 years. Those who don’t would be required to repay the tax credit plus interest.
Pace said the measure would help farmers and ranchers stay in business.
The measure, which would go into effect Jan. 1, would cost the state about $2.6 million a year in lost revenue.