Inheritance tax for Pa. farmers is no more

Governor Tom Corbett has signed a law that eliminates the Pennsylvania inheritance tax on farmers.
Before now, children who inherited the family farm had to pay an inheritance tax of 4.5 percent. Those who inherited farmland from a sibling had to pay almost triple that. “All of us in farming know of friends and peers that have had this very same problem that when a parent passes away and the farm is left to them, they end up having to basically dissolve the farm just to pay the inheritance tax,” said Sally Kolb of Kolb Dairy Farm in Spring City, Chester County. So, as the family patriarch got older, the Kolbs got creative.  “We actually bought the business from my father in law rather than waiting until he passed away,” said Kolb. “That way we own the business outright. He lives here and has lifetime rights to be here, but the purchase of the business is already complete — we already own it.” Now that the tax has been eliminated, the roughly 63,000 other farming families in Pennsylvania won’t have to be so crafty. Kolb knows some competing for money in Harrisburg in these tough budget times won’t be happy, though. “To cut away inheritance tax obviously is cutting a revenue source for the operation of the state,” said Kolb. “But I think this will really be healthier for the state in the long run because agriculture is the top industry in the state to begin with.” Pennsylvania’s 8 million acres of farmland generate around $6 billion in sales each year.